Last Chance to File: October 15 Tax Deadline Approaches

As the October 15, 2024, tax filing deadline approaches, millions of taxpayers who filed for an extension back in April need to act fast to submit their 2024 federal income tax return. However, it’s crucial to understand that while the IRS grants additional time to file the return, it does not extend the deadline to pay any taxes owed. Beyond the deadline, this is also an excellent time to review strategies for tax-efficient retirement savings, particularly through regular IRAs and the increasingly popular Crypto IRAs. 

Let’s break down what you need to know about the IRS extension deadline and how you can maximize your financial planning for retirement. 

The Final Stretch: October 15, 2024, Deadline for Filing Taxes 

For those who requested a six-month extension using Form 4868 back in April, October 15, 2024, is the last day to file your federal tax return without incurring penalties for failure to file. Here are some important reminders: 

Key Considerations for the Extension 

• Extension to File, Not to Pay: The IRS extension gives taxpayers extra time to file their returns, but any taxes owed were still due by the original April 15 deadline. If you haven’t paid your taxes yet, penalties and interest have likely accumulated. 

• How to File: Taxpayers can still use IRS Free File or other online platforms to submit their returns by October 15. If you’ve already made payments towards your estimated taxes, you simply need to ensure your return reflects those payments. 

Special Situations 

• FEMA Disaster Areas: For taxpayers living in areas designated as disaster zones by the Federal Emergency Management Agency (FEMA), the IRS often grants automatic extensions for both filing and paying taxes. To check whether your area qualifies, visit the IRS’s Tax Relief in Disaster Situations webpage.

• Overseas Taxpayers and Military Members: U.S. citizens living abroad and military personnel serving in combat zones may qualify for additional extensions to file and pay their taxes. It’s important for eligible individuals to be aware of the specific provisions that apply to them. 

Tax-Saving Strategies: Leveraging IRAs for Long-Term Financial Growth 

As tax season winds down, now is an excellent time to look at your retirement savings strategy and assess how you can benefit from Individual Retirement Accounts (IRAs). Both Traditional and Roth IRAs offer significant tax advantages, and newer options like Crypto IRAs are adding flexibility to long-term financial planning. 

Traditional IRAs: Immediate Tax Deduction 

A Traditional IRA allows you to make tax-deductible contributions, which can help lower your taxable income for 2024. The contribution limit for 2024 is $7,000, or $8,000 if you are 50 or older, which may allow you to significantly reduce your tax liability for the year. 

• Tax Deduction Benefit: If you contribute the maximum of $7,000 to a Traditional IRA, this can immediately lower your taxable income, especially if you’re close to the edge of a tax bracket. This tax-saving mechanism is particularly beneficial if you expect to be in a lower tax bracket upon retirement, as your withdrawals will be taxed then. 

Roth IRAs: Tax-Free Growth 

Unlike a Traditional IRA, contributions to a Roth IRA are made with after-tax dollars, which means you don’t get a tax deduction upfront. However, the real advantage of a Roth IRA is that your investments grow tax-free, and withdrawals during retirement are not taxed, provided you meet certain conditions. 

• Long-Term Tax-Free Benefits: This option is ideal if you expect to be in a higher tax bracket in the future. For younger individuals, or those who want to hedge against future tax hikes, a Roth IRA offers the chance to secure tax-free income in retirement.