Yes, only three days are left until the extension deadline. If you file on October 16th, it’s as if you never filed that extension (you will owe a 22.5% late filing penalty). So what should you do if you’re just starting on your return now?
First, in most cases tax professionals say it’s better to extend than amend. But extending is now out [1], so it’s better to get a reasonable return in. It can’t be a frivolous return: If you file a frivolous return, it’s even worse than not filing–you can get hit with a penalty for filing a frivolous return.
1. Get your documents together. If you have them, wonderful. If not, on Tuesday [2] you can use the IRS’s “Get Transcript” application to hopefully download a Wage & Income Transcript.
2. Include all of your income: Interest, dividends, rental real estate, gambling wins, etc. Just because you don’t receive a 1099 doesn’t mean you get to exclude that income! If you’re using software, carefully enter it where it belongs. Software does a great job putting numbers where you tell it to, but it’s also garbage in, garbage out.
You can download forms off the IRS’s website.
3. After you complete your return, look it over to make sure it’s reasonable.
4. If you live in a state with a state income tax, you have to file that too. And if you have a municipal or school district income tax, that’s also due. Most jurisdictions do have forms online.
5. If you’re filing electronically, keep the proof of filing. If you’re mailing your return, go to the post office or an automated postal center and spend the $5 on certified mail, return receipt requested. If your tax return is postmarked on October 15th, it’s considered timely filed. Certified mail gives you that proof. The automated postal centers can issue certified mail, and the postmark is the local time–even if the mail is picked up the next day (a very useful thing if you’re preparing your return at 11pm on October 15th).
6. If you’re thinking about calling up a tax professional, you need some luck. Most of us are quite busy dealing with our current procrastinating clients; October 13th is just not the time for a new client meeting.
7. Finally, make a vow with yourself that you will get started far sooner next year. While the 2015 Tax Season will likely be very unpleasant [3] and will probably start late [4], you should be able to get your returns started before October 1.
NOTES:
1. A few individuals can file a request for a second extension. If you were outside of the US on April 15th and will be outside of the US on October 15th (and both are for business/employment/residency purposes), you can file a request for a second extension. Phil Hodgen wrote about this last year (the rules haven’t changed).
2. The IRS, in its unending wisdom, has an annual “outage” of all computer systems on Columbus Day Weekend. Yes, all IRS computers are turned off just days prior to the extension tax deadline. If you’re scratching your head about this, well, so am I.
3. Next year features the first year of ObamaCare reporting, extender legislation that will probably pass late (see #4 below), and the IRS’s budget continues to shrink.
4. Congress has done nothing on “Extenders” but almost certainly will following the November election. IRS Commissioner Koskinen warned of issues if legislation passes late. Well, it will pass (in some form) late. Will it pass on January 1, 2015? I hope not, but if the Republicans gain control of the Senate (which wouldn’t occur until 2015; the Democrats will still run the Senate in the “lame duck” session), the Senate might work well or might not work at all. If you’re getting the idea that the 2015 Tax Season won’t be fun, that’s my view.
Tags: 2014.Tax.Season
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