CHICAGO, April 12, 2016 – Although taxpayers have a few extra days to file their returns this year, by midnight on April 18th instead of the usual April 15th deadline, the clock is ticking for those waiting till the last minute. Now that crunch time is here, The Illinois CPA Society is providing guidance and details to avoid getting overwhelmed and making mistakes in the mad scramble run-up to deadline.
Know your deductions
The standard deductions for 2015 tax filings, which can be claimed in lieu of claiming actual itemized deductions, are:
- $6,300 for those single or married and filing separately
- $9,250 if filing as Head of Household
- $12,600 for married taxpayers filing jointly and for qualifying widow or widower
- Greater of either $1,050 or $350 plus dependent’s earned income up to $6,300 for a qualifying dependent.
In the rush to get tax returns filed before deadline, it’s easy to overlook deductions that may help you earn a refund check from the Internal Revenue Service (IRS). Qualifying taxpayers may be entitled to additional deductions on top of their standard deductions, including:
- Home-office deduction – For taxpayers who are self-employed or work from a home office, the home-office deduction may be available. It’s calculated by deducting $5 for every square foot of work space used—up to a maximum of 300 square feet. So the maximum deduction would be $1,500. The original calculation method also may be used – figuring actual expenses and how they may apply over the course of the year to a home office.
- Health insurance premium deductions for self-employed – Business owners and self-employed taxpayers may deduct health insurance premiums, as long as they aren't already covered under their employer's or spouse's employer's plan.
- Health savings account (HSA) deduction - For 2015 tax filings, the maximum individual contribution limit was $3,350. The maximum contribution for family policies is $6,650. Contributions may be made up to April 15.
IRA contribution option
Looking to make a long-term investment that also offers a short-term tax break? Contributing to an individual retirement account (IRA) by the filing deadline might be a solid option.
Those in the 15-percent tax bracket who contribute $5,500 to their IRAs may earn a tax deduction of $825. Plus, taxpayers in the 25-percent bracket making the same IRA contribution would save $1,375 as well as $206 on their Illinois state income tax returns. Special rules may apply if you or your spouse were covered by an employer’s retirement plan at work.
Filing extensions, penalties
Accounting professionals can help last minute filers with Form 4868 for a six month filing extension. No reason for a filing extension is necessary but, an extension is only for added time to file paperwork and does not buy you more time to pay. Tax payments owed to the government still must be made before this year’s April 18 deadline.
Paying tax after April 18, even with a timely extension, may result in added interest and penalties. Late payment penalties are 0.5% per month for every month payments are late and some minimum penalties also apply.
Find a CPA Directory
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About the Illinois CPA Society
The Illinois CPA Society, with more than 24,000 members, is one of the largest state CPA societies in the nation. Our mission is dedicated to enhancing the value of the CPA profession through the strategic initiatives of advocacy, information, education and connections.