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 Tax and Financial Planning Calendar for April 2019
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Month
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Income Taxes
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Saving and Investing
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APRIL
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- Personal income tax returns are due 4/15/19 this year (unless you live in Mass or Maine and the deadline is 4/17/19)
- Request for automatic six month extension, Form 4868, due 4/15/19
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- Due date for funding your 2018 Roth or Traditional IRA, or Education Savings Account (ESA) is 4/15/19
- Due date for self-employed individuals to fund their retirement plans is 4/15/19
- Self-employed individuals who need additional time to fund a retirement plan should file a Form 4868 with the IRS by 4/15/19
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File Something On or Before 4/15
If you can't get your tax returns completed by April 15th, make sure to file for an automatic extension. Filing something on April 15h is the only way to avoid the Failure to File Penalty equal to five percent per month on any federal income taxes due. Yes, expect the IRS to charge you $50 per month on every $1,000 of taxes owed as of 4/15 if you don't file your tax return or extension request by that date.
Filing for an extension is easy. Simply submit a Form 4868 to the IRS, along with a check made out to the United States Treasury for an estimate of the taxes you might owe, if anything. Even if you're confident you'll be getting a refund, it's still a smart idea to file for an automatic extension.
By submitting an extension request (Form 4868) prior to the tax return due date, the Failure to File penalty of five percent per month is replaced with a much more reasonable Failure to Pay penalty of one-half percent per month. That's a pretty good return on your $.55 stamp used to mail the one-page automatic extension request, Form 4868, to the IRS.
Plus, if you end up owing the IRS no more than the greater of 10% of your total federal tax liability or $1,000, you should not be assessed any penalties at all, as long as you file your federal tax return by October 15th. In this case, you'll only owe interest to the IRS on your balance due at a very very low rate as of 4/15/19.
And While You're At It, Fund Your IRAs
When it comes to your IRAs, the deadline to put away money for 2018 is April 15, 2019, even if you file an extension. This deadline applies for traditional IRAs and Roth IRAs.
For 2018, you can contribute up to $5,500 into an IRA. Anyone 50 or older as of December 31, 2018 can put away an extra $1,000. If you're married, both spouses can contribute to an IRA provided one spouse has earned income during the year in excess of the total amount to be contributed.
One great reason to contribute to an IRA this year is to take advantage of the rule allowing all taxpayers to convert their IRAs to a Roth IRA regardless of their income. Prior to January 1, 2010, only taxpayers earning less than $100,000 could convert their retirement accounts to a Roth IRA. And based on some of the news coming out of Washington, doing away with this Roth Conversion strategy for high-
income taxpayers has been discussed.
Remember, there is also a relatively modest income limitation for Roth contributions. If your 2018 AGI exceeds $137k if single or $203k if married, you aren't allowed to contribute any money directly into a Roth IRA.
Buy Six Months to Fund Your Self-Employed Retirement Account
Are you self-employed? If so, filing an extension might make a lot of sense since it buys you an additional six months to establish and fund your SEP IRA for 2018. It's not uncommon for self-employed individuals to pay all of their taxes due with an extension, and then fund their SEP IRA, SIMPLE IRA, or Solo 401k, as well as submit their tax forms, by October 15th.
Two
Extra Days This Year for Residents of Mass and Maine
File Form 1040 by April 15, 2019. (If you live in Maine or Massachusetts, you have until April 17, 2019, because of the Patriots' Day holiday in Maine and Massachusetts and the Emancipation Day holiday in the District of Columbia.)
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WASHINGTON - The Internal Revenue Service today provided additional expanded penalty relief to taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.
The IRS is lowering to 80 percent the threshold required to qualify for this relief. Under the relief originally announced Jan. 16, the threshold was 85 percent. The usual percentage threshold is 90 percent to avoid a penalty.
"We heard the concerns from taxpayers and others in the tax community, and we made this adjustment in an effort to be responsive to a unique scenario this year," said IRS Commissioner Chuck Rettig. "The expanded penalty waiver will help many taxpayers who didn't have enough tax withheld. We continue to urge people to check their withholding again this year to make sure they are having the right amount of tax withheld for 2019."
This means that the IRS is now waiving the estimated tax penalty for any taxpayer who paid at least 80 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments or a combination of the two.
Taxpayers who have already filed for tax year 2018 but qualify for this expanded relief may claim a refund by filing
Form 843, Claim for Refund and Request for Abatement and include the statement "80% Waiver of estimated tax penalty" on Line 7. This form cannot be filed electronically.
The IRS and partner groups conducted an extensive outreach and education campaign throughout 2018 to encourage taxpayers to do a
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Paycheck Checkup
" to avoid a situation where some might have had too much or too little tax withheld when they file their tax returns. If a taxpayer did not submit a revised W-4 withholding form to their employer or increase their estimated tax payments, they may have not had enough tax withheld during the tax year.
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In the spirit of International Women's History Month celebrated each March, we've assembled some resources to educate women about Social Security, a
key component of your retirement planning
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The tools below will help you understand the basics of Social Security, how to plan and maximize your benefits, and address special topics such as disability, family benefits, divorce, or widowhood.
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Take a search of WISER Women's website - a nonprofit dedicated to improving the long-term financial security of women through education and advocacy
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2018 & 2019 Tax Facts
- For 2018, the standard deduction for a single individual is $12,000 and for a married couple is $24,000. A person will benefit by itemizing once allowable deductions exceed the applicable standard deduction. Itemized deductions include state and local income taxes (or sales taxes) AND real estate taxes limited to $10k per year, mortgage interest, charitable contributions, and medical expenses in excess of 7.5% of income in 2018 and 10% of income after that.
- Starting in 2018, personal exemptions are no longer deductible.
- The maximum earnings subject to social security taxes is $132,900 for 2019, up from $128,400 in 2018.
- The standard mileage rate is $.58 per business mile as of January 1, 2019, up from $.545 for 2018.
- The maximum annual salary deferral into a 401(k) plan or a 403(b) plan is $19,000 in 2019, up from $18,500 in 2018. And if you'll be 50 or older by December 31st, you can contribute an extra $6,000 into your 401(k) or 403(b) account this year.
- The maximum annual contribution to your IRA is $6,000 in 2019, up from $5,500 for 2015 through 2018. And if you turn 50 by December 31st, you can contribute an extra $1,000 that year. You have until April 15, 2019 to make your 2018 IRA contributions.
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