The tax clock is ticking -- do you know what to do?
The April 15 tax filing deadline is just hours away, and perhaps you still haven't filed. The top advice from CBS News business analyst Jill Schlesinger? Don't panic!
If you are filing a 1040EZ tax form, you may still have a little bit of time. The IRS estimates it takes only about 4 hours to complete it. But if you're filing the more complicated Form 1040, you may run into some trouble, as it takes an estimated 16 hours to complete.
Filing an extension
If you know you're not going to make the deadline, Schlesinger has some simple advice: File for an extension with Form 4868. "You get 6 months to file, but you are required to estimate what your tax liability was for last year -- and you've got to pay 90 percent of what you think you owe the IRS or else you'll get penalized," she explained on CBSN.
Late filing and penalties can total up to nearly half of what you owe in taxes, so it's crucial you send that form in. It may surprise you, but filing for an extension does not raise a red flag with the IRS or increase the likelihood of an audit, Schlesinger added.
Can't afford what you owe?
If you can't afford to pay the taxes you owe, Schlesinger says you can file for a 4-month extension, or you can look into an IRS installment plan. You can also make an offer in compromise. You could pay with a credit card, but that is generally discouraged because it incurs not only a hefty service fee, but you could rack up interest fees.
How long will it take to get my refund?
If you are filing electronically on April 15, Schlesinger says you should get your refund in about 3 weeks. But if you filed a paper return, that refund check could take 6 to 8 weeks. Aside from getting your refund faster, there's another reason to consider filing electronically: The error rate is less than 1 percent, while paper returns have an error rate of about 20 percent. And if you make less than $60,000, you qualify for the IRS' Free File program.
Common mistakes to avoid & red flags
Schlesinger said some of the major mistakes filers make include math errors, not reporting income that was reported to the IRS, forgetting to sign a return, wrong Social Security numbers and not claiming tax credits that are due to you -- especially if you make less than $80,000.
Tax returns that raise red flags include filers who are taking more deductions than the norm. The home office deduction may also draw scrutiny -- so know the rules.
Schlesinger's final word of advice? If you're running out of time, file for an extension, and if you need help, consider getting a tax professional.