The Procrastinator's Guide to Surviving Tax Day
If you are a procrastinator, tax filing season is probably the worst time of year. With deadlines looming, filling out all those complicated forms and making sense of an increasingly complex tax code that changes almost every year can seem like an overwhelming task. But no matter how long you put it off, the April 15 tax filing deadline will arrive, and what you do to get ready will make all the difference.
Most Americans voluntarily file their tax returns and pay their taxes. Most people explain it by saying they want to pay their fair share. Others file to get a refund, claim a credit or avoid breaking the law.
There are times when normally law-abiding citizens fail to file. Why? IRS research shows that sometimes people don’t file in years their filing status changes, such as due to the death of a spouse or divorce. Emotional or financial reasons may cause a person to not file. Or it could simply be due to procrastination.
Unfortunately, failing to file a return creates additional problems.
So here are some timely tips you can use to get your taxes done on time and steps you can take if you do miss the April 15 filing deadline.
Note: If you fall behind on filing your tax returns, you’re not alone and we can help. Reach out to our tax resolution firm and we’ll help you file late tax returns and negotiate with the IRS if you owe taxes.
Communicate With Your Tax Professional Early
Getting a jump start on tax filing season starts with communicating with your tax professional early. If you wait until the last minute, they’ll likely have less time for you and you’re leaving too many chances to make a mistake on your tax returns which can often cause more trouble in the future.
Gather Forms as They Arrive
Facing the tax deadline with a stack of papers is daunting even for the non-procrastinator. For those with procrastination tendencies, that mountain of paperwork can induce a sense of dread and even panic.
Instead of waiting until everything is ready to go, gather each tax form as you receive it and save it in a special folder on your computer.
Find Your Tax Return for Last Year
It is very important to have your prior year's tax return available, so find it before you begin. Nothing is more frightening for a procrastinator than trying to find this vital form at the last minute, so make sure you have it before you need it.
The tax return you filed last year will be required to verify your identity, an important step the IRS implemented in the face of growing identity theft and tax filing fraud.
If you haven’t filed for the previous year, now is the time to do it. You already will likely owe penalties and interest so procrastination makes the debt even worse.
If You Miss the Deadline
As a procrastinator, you know that things do not always go as planned. Last minute snags do happen, and despite your best efforts, you might still miss the April 15 tax filing deadline.
The good news is that you can file an extension. Whether you are using tax prep software or filing your return online, you can request an extension and instantly get six additional months to file.
That does not mean, however, that you can avoid paying what you owe. If you think you might owe money to the IRS, you still need to pay the tab, and that is where last year's return will come in handy.
You can avoid penalties if you pay at least as much as you owed last year, so verify the numbers and act accordingly. And now that you have an additional six months to file, it is time to stop procrastinating and get moving.
Being a procrastinator can have its benefits. Sometimes a decision made deliberately and slowly is preferable to one made in haste, something procrastinators know very well. But when it comes to filing taxes, procrastination can make an already stressful time even worse. If you want to survive tax filing season with your sanity, and your wallet, intact, you need to work smarter, not harder, starting with the tips listed above.
A tax resolution firm like ours has years of experience helping taxpayers just like you resolve IRS and State tax problems and negotiating the best deal on your behalf. If you’ll owe the IRS money for 2020 or prior years, contact us now for a consultation to learn about your options.
The good news is the IRS has several debt settlement options including their Fresh Start Initiative and is generally willing to settle with taxpayers who have been blindsided by a surprise tax bill and can’t pay it off in full.
Hopefully, tax filing season will bring the big fat refund you are expecting, but it is important to be prepared for the unexpected. The new tax bill has unleashed a host of unintended consequences, including smaller refunds and surprise tax bills. By being prepared, you can reduce the pain of a surprise tax bill, so you can get on with the rest of your life.
How to Amend a Tax Return for a Prior Year
Tax returns can often be filed with incomplete or incorrect information, leading you to more tax trouble than you bargained for. If you filed early, you might have overlooked income from a temporary job or a side gig, only to get a 1099 or late W2 for the income earned.
Other filers may eventually realize that they were entitled to an extra deduction or exemption. The Internal Revenue Service routinely processes a significant number of amended returns each year and provides a specific form for changing the status of an earlier tax return.
Individual income tax returns filed with the IRS can be amended up to three years after the due date of the original return by filing IRS Form 1040X. However, we strongly suggest consulting a tax resolution professional to help with your amended return. They can often file multiple years of unfiled tax returns, help you settle for a fraction of what you owe, and at the very least save you a headache.
Note: If you know you’ll have outstanding tax debt and owe more than $10k to the IRS or state but can’t pay in full, contact our firm today. We help people find tax relief and sometimes settle their tax debt for a fraction of what’s owed.
How Amended Tax Returns Work
Returns containing simple math mistakes are usually corrected automatically and do not require an amended return. Filing an amended return should be considered after the filer realizes the need for a change in filing status, income, allowable deductions or credits. The statute of limitations generally allows three years for each filer to claim any tax benefit not included on a prior return.
An increase in reported income is likely to result in additional tax due, but an additional deduction or allowable tax credit could result in a refund.
Unreported income is a common oversight and it’s better to report your income than it is for the IRS to come after you and add penalties and interest to your tax debt.
Form 1040X is not eligible for electronic filing and must be mailed in, this is also why we recommend hiring a professional to do this for you. A separate Form 1040X is necessary for each year being amended, and each must be mailed in its own envelope to the address provided in the instructions.
The amended return essentially adds the corrections to the original return. There is a block of space on the form to explain all changes. The explanation for each line change should include the line number followed by a clear reason for the change. Lines that entail no change need no explanation. A copy of the original return itself should not be attached, but any added IRS forms must be included to support the changes. Any other supporting documents necessary to substantiate the amendment will also need to be attached.
It can take several weeks for the IRS to process an amended return. An amendment to the federal return might also require a change to the state tax return of the filer, especially if an increase in income is to be reported.
OWE BACK TAXES?
If you’re going to owe money to the IRS after filing your return, It’s important to note that only experienced firms like ours are able to handle tax debt cases since negotiating with the IRS requires specialized skills that often fall outside of the scope of most conventional accounting, tax, and tax law firms.
Our firm specializes in tax problem resolution. We have CPAs, EAs and attorneys who can represent you before the IRS. We serve clients virtually so don’t hesitate to reach out. If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.
