Archive for the ‘Maine’ Category

The Almost-End of the 2023 Tax Season

Thursday, November 16th, 2023

It’s been a while since I posted: family issues, tax deadlines, and paper in every direction has made me concentrate on serving my clients, and not the blog.  I’ll have a recap of the 2023 Tax Season soon, but today is a celebratory day: Today is the almost-end of the 2023 Tax Season.  Thursday, November 16th is the filing deadline for California taxpayers (except for four counties in the northeast portion of the state).  I believe we have one signature document outstanding, but otherwise our outstanding California returns were filed.

It’s not the end of the 2023 Tax Season, though: taxpayers impacted by hurricanes in Florida (most of the state except for the Miami-Palm Beach area), South Carolina, Maine, and Massachusetts have until Thursday, February 15, 2024 to file their extended 2022 tax returns.  We have four such clients.

The IRS will be turning off electronic filing of individual returns this weekend until sometime in January.  The ancient IRS computer system (it dates to 1959) takes two months or so to be reprogrammed for the following year taxes.  If you need to electronically file a 2020 tax return (or a 2020 amended return), now is a great time to do so because after Friday you won’t be able to.

I’ll also soon have a preview of the upcoming paperwork tsunami disaster and what it means for both the 2024 Tax Season and Automated Underreporting Unit notices in 2025.

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Maine & Massachusetts Conform to IRS Hurricane Extension

Wednesday, October 4th, 2023

In the US we have a dual system of taxation: federal and state taxes.  Of course, you can be a resident of a state without state income tax like me and not have to deal with state income taxes, but most Americans file two returns. On September 26th the IRS announced they were extending tax filing deadlines for all taxpayers residing in Maine and Massachusetts because of Hurricane Lee. But states do not have to follow federal extensions (New York, for example, recently did not conform to a federal disaster declaration).

I called both the Massachusetts Department of Revenue and the Maine Department of Revenue Services.  Both states are conforming to the federal extension.  There is one additional step needed for taxpayers in Massachusetts: You need to write “STORM” at the top of your Massachusetts return.

This is good news for those impacted by the hurricane.  Do note this is just an extension of time to file, not pay.

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Bozo Tax Tip #5: Procrastinate!

Monday, April 11th, 2022

Today is April 11th. The tax deadline is just seven days away.

What happens if you wake up and it’s April 18, 2022, and you can’t file your tax? File an extension. Download Form 4868, make an estimate of what you owe, pay that, and mail the voucher and check to the address noted for your state. Use certified mail, return receipt, of course. And don’t forget your state income tax. Some states have automatic extensions (California does), some don’t (Pennsylvania is one of those), while others have deadlines that don’t match the federal tax deadline (Hawaii state taxes are due on April 20th, for example). Automatic extensions are of time to file, not pay, so download and mail off a payment to your state, too. If you mail your extension, make sure you mail it certified mail, return receipt requested. (You can do that from most Automated Postal Centers, too.)

By the way, I strongly suggest you electronically file the extension. The IRS will happily take your extension electronically; many (but not all) states will, too.  If you make an extension payment on IRS Direct Pay (using “Extension” as  the reason for the payment), the IRS will file an extension for you.

But what do you do if you wait until April 19th? Well, get your paperwork together so you can file as quickly as possible and avoid even more penalties. Penalties escalate, so unless you want 25% penalties, get everything ready and see your tax professional next week. He’ll have time for you, and you can leisurely complete your return and only pay one week of interest, one month of the Failure to Pay penalty (0.5% of the tax due), and one month of the Failure to File Penalty (5% of the tax due).

There is a silver lining in all of this. If you are owed a refund and haven’t filed, you will likely receive interest from the IRS. Yes, interest works both ways: The IRS must pay interest on late-filed returns owed refunds. Just one note about that: the interest is taxable.

(Note: If you reside in Massachusetts or Maine, your tax filing deadline for 2021 returns is Tuesday, April 19th.  Thanks to Patriot’s Day you get an extra day this year to file your tax returns and/or extensions.)

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