Emancipation Day in the District of Columbia will be celebrated on April 15 this year, giving Americans across the nation reason to dance as that means the income tax filing deadline has been extended to April 18. However, the day is still quickly approaching so the Association of Independent Consumer Credit Counseling Agencies encourages consumers who have yet to prepare for tax day to start planning and saving now.
“The first step for consumers who anticipate owing taxes is to learn the amount of their liability,” said Dave Jones, president, AICCCA. “The next step is determining what they will need to do in order to pay their tax bill.”
AICCCA offers consumers a tax time 2-step program leading up to and beyond April 18:
2 Steps to take now:
Determine your liability. The sooner you have this information the better. Sit down soon to either calculate your taxes or have your taxes reviewed by a tax professional. If you’re still using a paper 1040 form, consider tax software that will help you identify all qualified deductions.
Establish a weekly savings target. If you owe money, take a hard look at your budget and see if you can squeeze out money for taxes. Start by eliminating expensive meals, vacations and other discretionary expenses. Afterwards, look for ways to save on necessities like food, utilities and clothing. Inquire about overtime opportunities at work. Take a second job until your tax bill is paid. Hold a garage sale and sell those items you no longer need to apply the money to your tax bill.
2 Steps to take on tax day:
File on time. Filing later than April 18 will cost you in IRS-imposed penalties for late filing. Putting off filing because you don’t have the money to pay will only increase the amount you will ultimately owe if you fail to file on time. If you need more time, the IRS does accept extensions on filing through April 18. Keep in mind that a filing extension is not a payment extension. You will likely have to make at least a partial payment on April 18.
Research your credit options carefully. If you find you must borrow some or all of the tax due, be sure to compare interest rates and terms to find the option that is right for you. These include a bank loan, an IRS installment plan and an IRS approved credit card. You’ll pay interest on a bank loan, a processing fee and interest on an IRS installment plan and convenience fees plus interest to credit card companies. If you decide to use a credit card, be sure to have a plan to pay off the card as soon as possible.
2 Steps for the rest of the year:
Review W4 withholdings. Whether you receive a tax refund or must send a tax payment, you should review your W4 form annually. If you receive a large tax refund every year, you are effectively giving Uncle Sam an annual interest free loan. Earn interest income on that money yourself by increasing the number of withholdings. On the other hand, if you consistently owe taxes, you should lower the number of withholdings or have your employer take an additional amount each pay period for taxes if you already claim zero on your W4.
Ask for help. If you are at a loss as to how you will pay your taxes or would like help budgeting so you will not be in the same position next year, contact an AICCCA member office at 866-703-8787 or www.aiccca.org for help.
Founded in 1993, Association of Independent Consumer Credit Counseling Agencies (AICCCA) is a national membership organization, established to promote quality and consistent delivery of credit counseling services. AICCCA and its members are focused on improved creditor relations, efficient processes and advanced technology to best serve clients and creditors. AICCCA members are independent nonprofit agencies that advocate for debtors, counsel millions of consumers annually nationwide and provide debt management services to consumers with excessive unsecured debt. For more information or to contact an AICCCA member office call 866-703-TRUSTAICCCA (866-703-8787) or visit https://www.aiccca.org/.