Wednesday, October 14, 2015

Last-minute tax tips for Oct. 15 filers

FROM MARKETWATCH.COM

Oct. 15 is the annual filing deadline for personal income tax filers who filed for an extension.
Here are some tips to guide the frantic, last-minute filer:
  • Do not file online within the last hour of the deadline. If your software doesn’t work, or you have Internet problems, you will end up missing the deadline.
  • If you are planning to file on paper, check with your local U.S. post office facilities to see which branches will be post-marking mail up until midnight. Do this in advance, so you know exactly where to go. And show up at least a half hour before closing.
  • You still don’t have everything you need in order to file a complete return. Too bad! File anyway. There is a 5% per month late filing penalty if you miss the Oct. 15 deadline. There is no late filing penalty if you file something.
  • Don’t file a frivolous return just into order to file something. Make reasonable estimates of the missing income, expense, or tax basis of assets you sold. Make written notes about how you arrived at those estimates and put those notes into the tax return files you keep at home.
  • When you get the correct information later, file an amended tax return. Remember, you have up to three years to file an amended return, after you file the original return.
  • If you are working with a tax professional, do not walk into his or her office proudly at the last minute and expect them to appreciate you. They are human, and their nerves are already stretched to the limit trying to help procrastinators. Expect to pay huge rush fees — or expect to be filing late. After all, while you might get away with filing a quick and sloppy tax return — they must do a diligent job.
  • If you need to make a payment with your tax return, use the IRS’s Direct Pay tool. It’s free, draws the money directly from your account, and gives you proof that the IRS received your payment — and shows how the payment was applied.
  • What if you don’t have the money to pay the taxes that are due? That’s one of the biggest reasons people avoid filing their tax returns. Forget it. File anyway. You will have to pay those taxes sooner or later. And isn’t it easier to pay the balance due without 25% worth of penalties — and the interest on those penalties and the taxes?
  • If you can ultimately find the funds to pay your balance due within about three months, do so. If not, you can always arrange for an installment agreement with the IRS — often painlessly — using their Streamlined Installment Agreement tool online. This should work for most taxpayers, since the allowable tax debt to qualify is $50,000.
  • Whatever you file, keep a printed (or PDF) copy of your tax returns and all the forms, notes, 1099s, W-2s, etc. that went into producing the information reported on your tax return. Make copies of all payments — printing out any online payments.
Overall, the most important thing you need to know this week is — file. Don’t put it off because you’re frustrated, afraid, or confused. When you file, the stress is off.