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Forbes
24-04-2025
- Business
- Forbes
Experts Reveal 3 CommonTax Mistakes That Could Cost You Big
Frustrated shocked african man having problems, feel confused looking at laptop screen at office As tax season comes to a close each year, many Americans rush to meet the April 15 deadline and celebrate when they received a big refund. But according to tax experts, these popular strategies might actually be costing you money. Mark J. Kohler, C.P.A., J.D.,Founding and Senior Partner at KKOS Lawyers, specializing in tax, legal, wealth, estate, and asset protection planning and Timothy Wingate Jr., an IRS-certified tax specialist and founder of G+F Business & Financial Consulting, say taxpayers often fall for three common traps — and correcting them can lead to smarter financial decisions all year long. Here's what people get wrong about taxes and how you can take a more strategic approach. While the April 15 deadline is real, filing your return on that day isn't always required — or even wise. 'Contrary to popular opinion, it's not the end of the world if you don't file your personal 1040 tax return by April 15,' Kohler said. 'In fact, it can be very strategic to not file and instead submit an extension. Getting an extension gives you time to get all your records in order.' Timothy Wingate Jr., an IRS-certified tax specialist and founder of G+F Business & Financial Consulting, agrees—and offers practical advice for how to do it right. Here's how to file an extension the smart way, according to Wingate: Filing an extension gives you until October 15 to submit your return—but remember, it doesn't delay the deadline to pay any taxes owed. To avoid penalties or interest, it's smart to send a payment by April 15, even if your paperwork isn't ready. Most people celebrate a large refund check — but Kohler says that mindset needs to change. 'Our number one cost in life is taxes,' he said. 'If we can minimize that, we can deploy that money in other areas that make us money. That's the concept of tax planning.' Rather than aiming for a big refund, aim to owe nothing — and keep more of your paycheck throughout the year. Talk to a tax advisor about adjusting your withholdings, contributing to retirement accounts, or making strategic investments to reduce your taxable income. With nearly 40% of Americans working a side hustle, treating that income seriously is more important than ever. 'Side hustles aren't just income streams — they're tax planning opportunities,' Kohler said. 'But too many people miss out because they don't keep records or claim expenses.' 'Keep separate accounts, track all expenses, and consult a tax professional,' he said. 'That way, you can legally deduct business expenses and potentially lower your overall tax bill.' Accurate record-keeping is essential to claim these deductions — and to protect yourself in case of an audit. Don't wait until tax season to think about your tax strategy. Avoiding these common mistakes — filing blindly by April 15, celebrating big refunds, and ignoring your side hustle's business status — can help you keep more of your money. Instead, work with a trusted tax advisor, file smarter (not faster), and take full advantage of deductions and planning strategies year-round. Your future finances will thank you.
Axios
14-04-2025
- Business
- Axios
What to know about taxes, extensions and refunds for Tax Day 2025
The deadline to file federal income tax returns and extensions to the Internal Revenue Service is Tuesday for most of the country. Why it matters: Despite layoffs and DOGE cuts, the IRS is processing tax returns and refunds at a similar pace to last year. Timothy Wingate Jr., an Intuit tax expert, told Axios that "we haven't felt any major impact from refund delays" because of IRS staffing cuts. The Washington Post reported that Treasury Department and IRS officials predict a decrease of more than 10% in tax receipts or more than $500 billion in lost federal revenue, compared with last year. Last day to file taxes April 15 has been the traditional tax filing deadline since 1954, with exceptions for when the date falls on the weekend. Due to the pandemic, the Treasury Department and IRS delayed the deadline in both 2020 and 2021. The calendar pushed the 2022 and 2023 due dates, but 2024 was the first time since 2019 that Tax Day fell on April 15. States that have extra time for filing taxes Caveat: Taxpayers in some federally declared disaster areas have additional time to file through automatic extensions. Five states — Alabama, Florida, Georgia, North Carolina and South Carolina — have until May 1 to file their 2024 returns, as do parts of Virginia and other areas. All of Tennessee, Kentucky and Arkansas have until Nov. 3. There are other extensions for declared FEMA disasters. Tax refunds bigger in 2025 The big picture: Annual tax adjustments — including updated tax brackets, an increased standard deduction and other tax inflation adjustments — are lowering income taxes for many Americans. By the numbers: As of April 4, 101.4 million tax returns have been received, down 0.4% from the same time last year, according to IRS statistics. 100.3 million total returns have been received, up 0.2% from last year. $211.1 billion in refunds have been processed up 5% from $201.1 billion this time last year. The average refund has increased 3.5% to $3,116, up from $3,011 last year. IRS Direct File open for 25 states Zoom in: The Direct File program is available for about 30 million taxpayers in 25 states this year, an expansion from 12 states in 2024. The free online tax-filing program is mobile-friendly; works on smartphones, tablets and computers; and is available in English and Spanish. Direct File is available in the same 12 states it was available in 2024: Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming. It's also available in 13 new states: Alaska, Connecticut, Idaho, Illinois, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania and Wisconsin. Flashback: During the 2024 filing season, more than 3 million users checked to see if they were eligible to use the site, and more than 140,000 taxpayers used Direct File, surpassing the agency's goal of 100,000. Direct File users saved an estimated $5.6 million in tax prep fees, the Treasury Department said. What's next: The future of the program is uncertain. Treasury Secretary Scott Bessent pledged during his confirmation hearings that the free online tax-filing program would remain available this year, but did not commit beyond that. Tax extension: How to file for extra time State of play: You can get an extra six months to file taxes if you file for an extension by Tuesday, the IRS explains. The six-month extension gives taxpayers until Oct. 15 to file 2024 returns, but there is no extension on payments. If you expect to owe money, it is recommended that you send a payment by April 15 to avoid interest and other penalties. How it works: Individual taxpayers, regardless of income, who don't have tax due, can request an automatic extension by using IRS Free File or by submitting Form 4868, the application for the extension. Taxpayers with taxes due can request an extension when making a payment. The IRS says to submit an electronic payment and select Form 4868. Penalty for not filing or paying for taxes Threat level: Michael Frost, a Truist Wealth senior wealth strategist, told Axios to avoid penalties "taxpayers should consider being conservative in their estimate of their tax liability and their extension payment." Penalties are higher for not filing versus not paying. The failure-to-file penalty is a 5% penalty per month with a maximum penalty of 25% of the balance due, Frost said. The failure-to-pay penalty is 0.5% for each month, up to 25%, per the IRS. IRS Where's My Refund tool Follow the money: Refund status typically appears 24 hours after e-filing a current year return on the " Where's My Refund" tool, the IRS said. The information is updated once a day, usually between 4-5am ET. The tool is unavailable during the time. For paper returns, plan to wait about four weeks for an update. Mail paper tax returns IRS mailing addresses vary by the state you live in and if you are mailing in a payment. Find a list of addresses here. Last chance for IRS stimulus check Zoom out: The IRS estimates that more than $1 billion in refunds are unclaimed because taxpayers didn't file their 2021 returns, part of $2.4 billion in stimulus payments related to 2021 COVID recovery relief payments.
