TaxWatch Get email alerts

Everything you need to do before April 15

Published: Apr 9, 2014 9:51 a.m. ET


And what do to if you can’t pay by the deadline


Tax columnist

April is a tough month financially for most people. Our to-do and to-pay list is long, and we have to set payment priorities if there isn’t enough money to cover it all.

Most of our payments are due on April 15 this year. Folks in some states, like California, also have property tax payments due on April 10. So, that’s where the first dollars go this month.

In terms of income taxes and related costs, here’s your list of what’s due on April 15:

Payments to the IRS and your state

Income taxes : You are expected to pay your balance due for 2013 — even if you put your tax return on extension. You’ve heard the boring old litany from the IRS. “The extension is for additional time to file — not to pay.” We’ll talk more about this in a few moments to explain why this is not entirely true. Read: How to get more time from the tax man.

Estimated taxes: It’s time to start paying up for your 2014 profits and earnings. There is always a lot of confusion on how much needs to be paid, especially when your income is earned unevenly throughout the year. Figuring out what you owe requires you to get your bookkeeping done for each quarter. Or you need to have a solid idea of your investment income and/or business profits. Of course, you can often get away with simply paying one-quarter of last year’s liability to avoid the underpayment penalty. This doesn’t work when your income has increased substantially. In that case you’ll have to run the numbers to avoid the penalties.

Pay to financial institutions

IRA or Roth IRA contributions: Folks who want credit for contributions to individual retirement accounts for 2013 must finish funding your total contributions by April 15. You must also finish characterizing and re-characterizing your Roth contributions by this time. Don’t you just love the decisiveness of people playing the Roth IRA game? Folks writing to TaxMama engage in complicated dances moving the funds back and forth between IRAs and Roth IRAs multiple times during the year. Why not just wait until you know where your finances actually stand — and do this only once — after the year ends and before April 15?

What to consider before you switch advisory firms

Here's what advisors need to consider before they can shops.

How do you prioritize your payments when you don’t have enough money to cover them all?

Step one: Fund your 2013 IRA. April 15 is the last instance in which you may fund the accounts for 2013. You can’t decide you want an IRA and fund it later. Besides, some people who fund their IRAs will also qualify for a Retirement Savers Credit — and get back up to $1,000 of their contribution ($2,000 married filing jointly).

Step two: Pay your current year estimated tax payments. Does this seem illogical? Do you think it makes more sense to pay as much as possible of last year’s taxes and stop the interest and penalties that are accruing? Well, that might make sense to you and me, but tax officials have a different point of view. Oddly enough, there is logic to that, too. Read the next step and you’ll get the explanation. But first, if you don’t have enough money to pay the full amount of the required estimated tax payment — pay as much of it as you can, leaving a hundred dollars or two for the next step.

Step three: Put your 2013 taxes on extension. Pay as much of last year’s taxes as you can afford to pay with the extension — even if it’s only $50 each to the IRS and state(s). (Yes, some people must pay several states.)

So, why are we only paying a small part of this with the money we have left? Because if you are going to need an installment agreement, neither the IRS nor the state will give you one if you are not “in compliance” for the current year. In other words, if you were bad last year, they’re not willing to help you out if you’re not showing a good-faith effort to be good this year. When you think about it, it does have a certain level of logic, doesn’t it?

What happens when you only pay a part of last year’s taxes and you still owe a big chunk? What can you do? First of all, the extension gives you six months to raise the money to pay 2013’s taxes. That’s a lot of time. You can get a second job, sell off securities if you have them, or borrow money.

Prev Page
1 2

Data Provided By
Today's Interest Rates

Credit Cards
  1. 4.29%
  2. 3.95%
  3. 3.13%
  4. 3.01%
  5. 3.98%
  6. 3.14%
  7. 3.11%
  8. 3.19%
National averages from
  1. 1.51%
  2. 0.86%
  3. 0.7%
  4. 0.36%
  5. 0.64%
  6. 0.43%
  7. 0.5%
National averages from
Avg. APR Last Week 6 Months
Low Interest 10.37% 10.37% 10.37%
Balance Transfer 12.73% 12.73% 12.64%
Business 12.85% 12.85% 12.80%
Student 13.14% 13.14% 13.27%
Reward 14.90% 14.90% 14.97%
Cash Back 14.94% 14.94% 14.91%
Airline 15.52% 15.52% 15.30%
Bad Credit 22.73% 22.73% 22.73%
Instant Approval 23.33% 23.33% 28.00%

MarketWatch Partner Center