OK, so despite your best efforts, you didn’t quite get your taxes done. Well, if you are hesitating as to why you should file your taxes ASAP, read on (plus review our “Tax Preparation Tips”).
What’s the big deal?
- If you owe 2011 taxes, they were due on April 17th, 2012. If you didn’t pay your tax debt at that time, you are now accruing penalties and interest.
- If you are due a refund, what are you waiting for? They can’t send you a check without a tax return!
Is it too late to file for an extension?
No, but do it right away.
If you think you may owe money, do a rough estimate of taxes due (or the amount equal to what you sent in last year) and send with the extension. This is the point of sending in the extension, even if it is late. You limit your penalty and interest by paying now, rather than later when you file your return. It’s damage control.
Note: The IRS calculates penalties and interest on your outstanding tax balance. The penalty for not filing is 5% per month, the failure to pay penalty is 0.5% per month + a monthly interest charge. Lesson? If you think you owe, file the extension and finish your taxes, quickly.
TIP – Avoid getting caught like this next year. Take a look ahead at your 2012 earnings; if you think you may owe a lot of taxes for next year, set up quarterly estimated taxes now and you won’t be in this predicament next April.
How to do it:
File Form 4868: http://www.irs.gov/pub/irs-pdf/f4868.pdf, and send in the tax money due.
TIP: Be sure to send everything Certified Mail, with a Signature Return Receipt as documentation that you sent in the materials.
Get going on finishing your taxes!
Procrastinating because you’ve lost your documents? Don’t – you can call your employer for your W2, or contractor to get your ‘1099 misc’. The IRS also has your income documents as well, and you can request them with Form 4506-T. (Be aware that the IRS holds only federal information; you’ll have to go to your local government for state tax withholding, etc.) You can also call the IRS and ask for a Wage and Income transcript. Historically, the IRS took a year or more to create a transcript for you. The IRS is up to date for 2011, and you will probably get an accurate transcript..
Procrastinating because you don’t think you have enough money to pay the tax due? First, you may be mistaken and owe nothing, or less than you think – the majority of people in the US get refunds. Second, if you don’t have all the funds you owe, send in what you can, and then apply for an Installment Agreement (see “Paying Your Tax Debt”). Remember, filing as soon as possible will keep any penalties to a minimum.
TIP: Make an appointment with a tax professional – they can review your tax return for common errors, make sure you haven’t overlooked any tax benefits, and can assist you with Agreements. Best of all, that deadline is a great motivator to have.
How much time do I have to get my taxes in?
Your next deadline is October 15th. Promise yourself that you will not wait until the last minute to do your taxes before this date. If your spring is too busy, set aside a time in early summer to get it done. Then you’ll be able to enjoy summer with a clear conscience, and won’t that be nice?
In the next Blog we’ll cover all the other Tax Deadlines that you should have written in your calendar for the tax year.
If you have questions about Extensions, Taxes Due, or any other tax related issues, contact Litchfield County tax attorney Martha Miller at 860-435-4666.