The deadline for the federal tax extension is October 16th. Here are three things you should know

If you requested a tax extension for a longer period on your 2022 tax return, the deadline is fast approaching.

The federal tax extension deadline of October 16 is the last chance to avoid a penalty for late filing, they say the IRS. However, some applicants are in Disaster areas may have additional time.

“The best thing you can do to meet the extension deadline is to get organized,” said certified financial planner Chris Cybulski of Chisholm Trail Financial Group in Austin, Texas. “Highlighters, sticky labels and manila folders are your friends.”

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“There is nothing worse than having an incomplete mess that only takes a few days to file,” he added.

According to financial experts, here are three things you should know if you haven’t filed your 2022 taxes yet.

1. Know the IRS late penalties

According to Kassi Fetters, CFP and owner of Artica Financial Services in Anchorage, Alaska, if you miss the deadline you could face two IRS penalties.

The Penalty for failure to file is 5% of unpaid taxes for each month or part of a month until filing, capped at 25%, she said. In comparison, this Non-payment fee is 0.5% per month or part of a month. Both include interest.

2. You may be eligible for a free IRS file

About 70% of taxpayers are eligible IRS Free File, but only 2% used it during the 2022 filing season, according to the Advocate for national taxpayers.

You may be eligible with an adjusted gross income of $73,000 or less in 2022 – but Free File is only available until October 16 at 12pm ET the IRS.

This is a good option for those who need to file simple tax returns, do not need ongoing tax planning advice and could benefit financially from the free service.

Judy Brown

Director of SC&H Group

“It’s a good option for those who have simple tax returns, don’t need ongoing tax planning advice and could benefit financially from the free service,” CFP Judy Brown of SC&H Group in the Washington and Baltimore area previously told CNBC. She is also a qualified auditor.

3. You can still fund individual SEP retirement accounts

There are now limited opportunities to score a 2022 tax deduction before filing, said Houston-based CFP Scott Bishop, managing director of Presidio Wealth Partners. He is also a certified public accountant.

Former IRS contractor charged with leaking wealthy people's tax returns

However, self-employed, contract or gig economy workers can still contribute to a Simplified Employee Pension Account (SEP), an individual retirement account, he said. “This could help your retirement savings and give you a nice deduction.”

You cannot set up a SEP IRA until after your company’s income tax filing deadline, including extensions the IRS.

Join CNBC’s Financial Advisor Summit on October 12, where we’ll talk to top advisors, investors, market experts, technologists and economists about what advisors can do now to position their clients for the best possible outcomes as we move forward Approach the final quarter of 2023 and face the unknown in 2024. Find out more and Get your ticket Today.

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