Last-Minute Tax Tips for Procrastinators
It's April already. Are your taxes done? If your answer to the question is no, you are not alone. The Internal Revenue Service says as many as 25 percent of taxpayers file their returns the final two weeks before the filing deadline. And with the recent COVID-19 coronavirus pandemic that we have been experiencing as well as the multiple stimulus programs offered, that percentage is probably quite higher.
If you have not completed your taxes yet, here are some stress-relieving ideas:
Don't Procrastinate Anymore Resist the temptation to put off your taxes until the very last minute. Your return takes time to prepare and your preparer may need to request certain documents from you, which will take additional time.
Don't Panic If You Can't Pay If you can't immediately pay the taxes you owe, consider some alternatives. You can apply for an IRS installment agreement, suggesting your own monthly payment amount and due date, and getting a reduced late-payment penalty rate. You also have various options for charging your balance on a credit card. There is no IRS fee for credit card payments, however the processing companies charge a convenience fee. Electronic filers with a balance due can file early and authorize the government's financial agent to take the money directly from their checking or savings account on the April due date, with no fee.
Request an Extension of Time to File, But Pay on Time If the clock runs out, you can get an automatic six-month extension, bringing the filing date to October 15, 2021. The extension itself does not give you more time to pay any taxes due. You will owe interest on any amount not paid by the April deadline, plus a late-payment penalty if you have not paid at least 90 percent of your total tax by that date (normally, but see exception above). Contact your tax professional for a variety of easy ways to apply for an extension.
Tax Filings Relative to The COVID-19 Pandemic As of this writing, the tax season has not been extended due to the continued COVID-19 pandemic. However, those who owe taxes do have options. The Secretary of the Treasury Mnuchin announced that IRS payments can be deferred for 90 days interest and penalty free. He stressed that tax returns still be filed timely, especially if a refund is expected. File electronically and process through direct deposit for the most efficient way to receive the refund. According to the Commonwealth of Massachusetts Department of Revenue website, the DOR is prepared to follow the IRS in offering similar relief for taxpayers with Massachusetts tax filing obligations. The situation is fluid and things are changing almost daily. Please reach out to the office for further clarification or check out our online updates relating to COVID-19.
To get an estimate of what you owe, you generally have to do a dry run of your tax return—which probably means you will have almost everything you need to file anyway. If they’re 90 percent done, it’s really in your best interest to just get it done and file by April 15th.
Jeffrey Schweitzer can be found at Northeast Financial Strategies Inc (NFS) at Wampum Corner in Wrentham. NFS works with individuals and small businesses providing financial and estate planning, insurance, investments and also offers full service accounting, bookkeeping, payroll, income tax preparation, and notary public services. For more information call Jeffrey at 800-560-4NFS or visit online - www.nfsnet.com