Are you tax savvy? Take our quiz to seek out out
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Tax season can be stressful. Whether you submitted the application early or you want to meet the April 18 deadline, there are a few things to keep in mind that will simplify the process.
As of March 24, the IRS has processed more than 80 million returns and issued more than 59 million refunds. And the average refund is about $2,900, compared to about $3,300 at the same point last season.
If you already consider yourself a tax expert, test your knowledge with our 10-question quiz to see where you stand.
As part of the effort of National Financial Literacy Month, throughout the month CNBC will feature stories that help people manage, grow and protect their money so they can be truly ambitious.
As the tax deadline approaches, CNBC spoke to financial experts about what you need to know if you haven’t filed your tax return yet. Here’s her #1 advice.
You can apply for a tax extension free of charge
If you haven’t already filed and you’re still missing key tax forms, experts suggest filing a free tax extension until the deadline, which offers an additional six months to file your federal return. (Your state may require a separate extension.)
“It’s better to go for renewal and prepare the return properly than filing junk,” said certified financial planner Marianela Collado, CEO of Tobias Financial Advisors in Plantation, Fla., noting that missing details could delay the process.
It is better to go for an extension and prepare the return carefully than to archive rubbish.
CEO of Tobias Financial Advisors
However, you must still pay your balance by the original date to avoid penalties and interest. The late payment penalty is 0.5% of your unpaid balance per month, up to a maximum of 25%, and the interest is currently 7%.
Most people can get free federal tax return help
Stacy Miller, a Tampa, Fla.-based CFP at Bright Investments, urges last-minute filers to consider IRS Free File, a partnership between the IRS and several private tax software companies that offers online consulting.
You may qualify for the IRS Free File if your 2022 adjusted gross income was $73,000 or less, and you can use the agency’s search tool to find the best option based on your location, income, and other factors.
Although 70% of taxpayers qualified to use IRS Free File during the 2022 filing season, only 2% used it, according to the National Taxpayer Advocate’s annual report to Congress.
There’s still time to lower your bill
When it comes to last-minute tax strategies, the “toolbox of options is a lot smaller” once the tax year ends, according to John Loyd, a CFP and owner of The Wealth Planner in Fort Worth, Texas. He is also a registered agent.
Still, there may be a few steps worth considering, such as: B. Contributions to an individual pre-tax retirement account or contributions to a spouse’s IRA for 2022. However, eligibility depends on your income and retirement plan at work.
You can also claim a tax break by topping up your Health Savings Account (HSA) for 2022, provided you had qualifying high-deductible health insurance.