The End Is Near! Your Federal Income Taxes Are Due April 15th.
What Type of Taxpayer are You?
It's That Time Again. Taxes Are Now Due!
Federal income tax returns are due April 15th. With all of the new changes in the tax law, many are not sure if they will still get a refund or actually owe this year. If you get your taxes done early and you get a refund, file and take the money. If you owe, the money isn't due until April 15th so you have time to get the money together.
Will you get your taxes filed in time?
As an income tax filer, which category do you fall into?
- Procrastinator: I know I should get them done, but I always put them off. I have everything, but I like to wait. When I used to have to mail my return to the IRS, I loved going to the post office just before midnight on April 15th to be part of the party. I don't ever plan on filing 1 minute before I have to. It isn't a good idea to wait this long anymore. The post offices close at their usual time on April 15th.
- Not Enough Time: I have a complicated return, I own a business, and I have had some personal issues so I don't think I can file by April 15h. I need a little more time to get everything together to get it done.
- Can't Pay the Bill: I have completed my taxes, but I owe. I can't figure out how I am going to pay the bill by April 15th. What are my options?
- Need to Make a Change: My taxes are all done. I did them right away. My refund has come and gone. Maybe I did them too early. I received another 1099 that should have been included as part of my return. What do I do now?
- Don't want a tax bill like that again: I am all done. I filed my return and paid the taxes due but, I don't want to have to pay a bill like that again. What changes can I make now so that you don't owe next year?
- Tax Star: My taxes are done. My refund is safely in a savings account and I am well prepared for next year.
If They Aren't Done, Do Them
You should have all of your forms by now. If your taxes aren't done yet, it is time to start thinking about doing them.
Here are the ways to file your taxes:
- You can file the old fashion way. Download the forms you need from the IRS site, get out a pencil and calculator and do your tax return by hand.
- The better, more reliable way, and the way preferred by the IRS, is to e-file your federal income tax return.
- Hire a paid tax preparer or CPA to do your taxes for you.
The old fashion method, by hand, risks calculation errors and other mistakes. Plus, filing a paper return through the mail will greatly delay your refund.
Members of certain groups, such as the elderly and low income filers, may be able to have a volunteer prepare your return for you for free.
Paid tax preparers and CPAs can be well worth the money but, they do cost money and may not be necessary for all filers.
I Want to e-File:
So, how can you e-file your federal income tax return at a reasonable price (or ideally for free)?
- Purchase tax preparation software from Amazon, Staples, Walmart, Best Buy or other retail outlet.
- Participating software companies have made their tax preparation products available through the IRS website. Use of these products may be free if your Adjusted Gross Income is less than $66,000.
- If you have a very basic return and are comfortable completing the tax forms on your own, you can use the IRS Free File Fillable Forms, on-line versions of the IRS paper forms. These forms will only do very basic calculations.
Note: These free products may not include state and local tax returns. You will have to go to other sites for these forms.
File For an Extension
If you need extra time to file your tax return, the IRS will give you an automatic extension of 6 months (4 months if you are out of the country) to file your tax return. All you have to do is file Form 4868. You can file Form 4868 electronically or by mail.
The Catch 22
Form 4868 is used to file for an automatic extension for filing your tax return, it does NOT give you an extension to pay your taxes. For tax year 2018, to avoid penalties and interest, your taxes have to be paid by April 15, 2019. With an extension, you have until October 15, 2019 to file your return. I am not sure how you know how much to pay if you haven't filed your return.
If you know you are getting a refund, it would seem to me there would be even more motivation to get your taxes done sooner rather than later. If you are getting a refund, does the IRS really care if you ever file a return? (I believe the answer is yes they do.)
Pay Late, You Owe Interest and Penalties
If you owe taxes, paying after April 15th incurs penalties and interest on the taxes due. If you are due a refund, the government does not owe you interest on the money you waited to get back. The government only pays interest on a refund if they are responsible for delaying it, not because you delayed filing.
Arrange a Payment Plan
You have filed your taxes and find out that you don't get a refund. In fact, you owe some more!
- You can afford to pay the entire amount you owe:
Simply send a check or money order with your return if paper filing or send it in with a voucher if you e-filed. Be sure and put your social security number on the check or money order. You could save the check and stamp if you provide the IRS with your checking account number and bank routing number when you e-file your return. This authorizes the IRS to withdrawal the money directly from your account.
- Use the Federal Electronic Tax Payment System (FETPS) to pay your taxes over the internet or by phone. FETPS can be used to pay all taxes; income, estimated, employment and excise.
- Pay with a debit or charge card over the phone or, in some cases, with your e-file software provider. There is a fee involved for using the charge card. The fee can be as high as 3.93% of the amount being financed. Also, if you charge the taxes due, you may incur interest charges on your credit card balance from the day you make the payment.
You owe and you would like to make arrangements on your own:
- If you can't pay your taxes due immediately you could set up an installment agreement for monthly payments. You can apply on-line or by completing a Form 9465-FS and mailing it in. This arrangement may be associated with a set-up fee, interest, and penalties. Future refunds will be applied to any outstanding taxes you still owe.
- If you owe more than $50,000 you must call the IRS directly to arrange an installment agreement.
You owe and if you lived a 100 years you wouldn't be able to pay it all off:
- If financial hardship will prevent you from ever paying off the full amount of taxes you owe, you can make an Offer in Compromise to settle your debt for less than what you owe. The IRS may consider this offer if they feel it represents the most they can expect to collect from you in a reasonable period of time.
- You may have to seek the help of a professional to assist you in completing this process.
Fix or Change a Return Already Filed
Got an extra W-2 or 1099 after you filed? Forgot a deduction? It is not too late to fix your return. If you have already filed your return, you can amend it by filing a Form 1040-X. Do not file a Form 1040-X before you file your original return.
To file a Form 1040-X, you will need a copy of the return you want to amend, including all forms, schedules and worksheets. You will also need the new forms you have received as well as any notices from the IRS regarding adjustments to the return.
In general, you have up until three years after the original return was due, including extensions, to file a Form 1040-X.
If the amended return results in additional taxes owed, you could also owe penalties and interest. An amended return could decrease or eliminate a refund you have already received. In this case, you would have to pay the money back plus a penalty.
Prepare for Next Year
Now that you are done filing your tax return for this year, it is time to start preparing for next year.
Adjust Your Withholding or Make Estimated Payments
Owe additional tax, penalties, and interest with your tax return this year or get a big refund? You can change the federal tax withholding from your paycheck or pension. If you are self-employed, you should be making quarterly estimated tax payments. You can adjust your quarterly payments based on your anticipated business income for this year. You can even have tax withheld from your social security benefit (Yes, you may have to pay tax on your social security benefits.)
How to Adjust your Withholdings or make Estimated Payments:
- Fill out a new W-4, Employee's Withholding Allowance Certificate, with your employer to adjust the federal tax withheld from each of your paychecks.
- A W-4V, Voluntary Withholding Request, can be filed to adjust the federal tax withheld from your social security benefit or unemployment compensation.
- A W-4P, Withholding Certificate for Pensions and Annuities, can be filed to adjust the federal tax withheld from a pension, IRA, or annuity.
- Use Form 1040-ES to figure and pay estimated quarterly tax payments.
Start Planning Tax-Efficient Strategies You Can Implement This Year
Check out the tax law changes for this year and try to prepare for next year's filing season. If possible, discuss appropriate strategies with your tax preparer, financial adviser, or accountant to help minimize this year's tax bill. Be proactive now to increase your refund later. Don't wait until the last minute.
Any federal tax or tax planning information provided above or linked to this article is not meant to be specific to any particular individual or situation. Anyone who wishes to apply this information should first discuss it with an accountant or tax professional to determine its appropriateness or how it specifically applies to their unique situation.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
Questions & Answers
© 2012 Mark Shulkosky