Mark Twain said, "Never put off until tomorrow what you can do the day after tomorrow." Well, a few days after tomorrow is officially April 15, and there isn't any time left to procrastinate on your taxes. With these tips, even the most time-constrained, frenzied entrepreneur can get taxes filed on time, without errors, and maybe even save a few hard-earned dollars.
First, let's quickly brush up on the changes to tax laws. The American Taxpayer Relief Act, or ATRA, and the Affordable Care Act, or ACA, created some changes from prior years. Certain individuals are now subject to a 0.9 percent additional Medicare tax on wages, self-employment income, and other compensation received. ATRA permanently extended the income tax rates enacted in 2001 and 2003. Top-earning entrepreneurs will be subject to a 39.6 percent top marginal tax rate. To add salt to those wounds caused by a higher marginal tax rate, high-income entrepreneurs may not be able to deduct the full amount of their personal exemptions or itemized deductions. On the positive side, entrepreneurs living in no-income-tax states, like Texas, Nevada, or Florida, will be able to take a deduction for state and local sales taxes paid.
With that in mind, here are three ways you might save a few dollars, even at this late hour.
- If you worked more than one job in 2013, be sure to claim a credit for any overpaid Social Security taxes withheld from your wages.
- Include all carryovers (investment interest, capital losses, and charitable contributions) from your prior year's tax return.
- Consider setting up a simplified employee pension (SEP). As long as the SEP is set up before the filing of the return and the contribution to the plan is timely made, this can be a procrastinator’s best friend to reduce taxes.
If filing your taxes by April 15 still seems impossible, you can request an automatic six-month extension, which will give you until October 15 to file. This is accomplished by filing Internal Revenue Service Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. But beware, the full payment of your tax bill is still due on April 15.