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One way to reduce your 2017 tax bill is to buy a business vehicle before year end. But don’t make a purchase without first looking at what your 2017 deduction would be and whether tax reform legislation could affect the tax benefit of a 2017 vs. 2018 purchase.Read more
Filing your federal tax return after filing for an extension
April 15th may be more than six months away but it is never too soon to start thinking about how and when you will file your tax return. If all taxes due are not paid on time, you run the risk of penalties and interest. This is not a situation most people want to be in.
You avoid penalties by withholding a sufficient amount from your earnings or paying a quarterly estimated tax. However, you can get a waiver of the penalty for underpayment if:
- you suffered some financial misfortune caused by a disaster or “unusual circumstance” and it just wouldn’t be fair to impose a penalty, or
- you retired after age 62 or became disabled during the tax year
So long as your underpayment was not due to “willful neglect,” the IRS will consider overlooking the penalty. Naturally, you still have to report the estimated tax penalty in your return.
Speaking of penalties…
If you miss the April 15th tax filing date, an additional clock starts ticking. The penalties and interest on what you owe mount, and they will not stop until the matter is resolved. There are some automatic 6-month extensions for filing individual tax returns for citizens living and serving in the Armed Forces outside the United States.
Everyone else can apply for an automatic 6-month extension by filing IRS Form 4868. The form must be filed by April 15th.
If you are owed a refund, there is no penalty for missing the April 15th filing date.
The big “however”…
The IRS makes it clear that an extension of time to file your return does not grant you any extension of time to pay your tax liability.
Nevertheless, there are valid reasons…
Our personal and financial lives are fraught with the unexpected. Unforeseen circumstances--fire, flooding, business reversals--can place records keeping and tax accounting on the back burner.
On the other hand, unexpected financial windfalls or unanticipated income could have tax liability consequences. The extra filing time could provide the breathing room to gather the documentation, fill out those additional forms and take advantage of what our tax code offers to reduce that tax bill.
To recap…
When You File that Extension Request, the Due Date Gets Pushed, but...
- You still owe outstanding taxes
- The tax must be paid by April 15, or penalties/interest will accrue
- If you cannot pay all/anything, consider requesting a time payment or offer in compromise. (Note: Expect an additional charge to set up a payroll deduction or direct debit agreement to pay off your tax bill.)
Your extension request is in. Now what?
If you need assistance with filing your tax return that is on extension or are considering extending a tax return in the next tax year, reach out to us. We can assist you with the process from start to finish.
Turbo Tax and Do-It-Yourself VS. Professional Tax Preparer
Tax time brings a multitude of financial decisions, including whether to hire a tax professional or prepare your own taxes using software like TurboTax. While the low cost and advertised ease of do-it-yourself tax products may be tempting, they aren’t always what they claim to be. In fact, many tax filers find them frustrating and time consuming with very little actual cost savings. These drawbacks and increased stress often makes hiring a professional tax preparer a smart move.
The Dangers of Do It Yourself Taxes
When people consider using do-it-yourself tax filing software, they typically focus on the positives, like the low cost and ability to use them from their couch. However, these programs have quite a few negatives as well, which could wind up causing an audit, late penalties and even interest charges. Here are a few problem areas:
- They’re time consuming and stressful- Tax software promises to walk you through all the steps, but what happens when you don’t understand the steps? Online help systems and FAQs are often insufficient to help you understand what to enter. For example, health insurance premiums can be deducted in some instances but not all.
- You can enter any numbers into the return – The ability to enter any number into the software may seem like a good idea, but it can be dangerous. A higher charitable contribution amount or inflated IRA may get you a bigger return, but it can also get you into serious trouble down the line.
- You don’t know if you did it correctly – There are few tax topics that apply to everyone. Most only apply to some people in some cases. Many software programs don’t ask enough questions to find out if you are truly qualified for a deduction, for example mileage deduction for a vehicle.
- There’s no continuity- Even if you use the same tax program every year, it can make errors. Most programs say that they import information from the previous year, but would you know if they didn’t? Most people don’t and end up losing deductions or credits that they qualify for.
Big Box Drawbacks
Some people know that they don’t have the skills or patience to do their own taxes. However, to save on costs they go to a big box tax service like H &R Block or Liberty Tax Service. While the price may be right for these services, there are some things you should know. Primarily, they use untrained staff to prepare taxes. Most of their preparers have only taken a four to six-week course in taxes. They aren’t even required to have previous experience in accounting and rely on software programs to do most of the work. That means they aren’t any more knowledgeable than you are. In addition, many of these stores close on April 17th, which means they aren’t around if you are audited by the IRS.
Benefits of Professional Tax Preparers
Professional tax preparers have years of knowledge, advanced degrees and certifications, such as Master’s Degrees and CPA and EA licenses. Their experience and education is what will ensure that their clients get all of the deductions and credits that they deserve.
Here are a few more advantages that these tax professionals can put to work for you:
- They can often represent you if you are audited and help you handle collection matters.
- They provide tax planning to help you make tax saving decisions early.
- They spot opportunities to help you make smart tax decisions like converting ordinary income into capital gains.
- Their office is open year-round to answer your questions
At Dukhon Tax, we understand taxes down to a theoretical and statutory level, which is much better for our clients! Visit our website for a free, no obligation consultation! We even offer a special package for students!
We Love Students!
At Dukhon Tax and Accounting, we have a special place in our heart for our local student population.
Remember, we were once students too - and of course, we always remain studious and continue learning! As such, we'd like to show how much we appreciate the great minds of our local college community by offering a special price on tax preparation and online tax filing services.
During the month of February, we will be offering a special price on tax preparation for local students. We know that winter semester is a busy time. However, getting your tax refund quickly and easily should brighten up your spirits!
For local students who present a valid student ID, we will be offering a flat rate of $100 for basic preparation of tax returns*.
Instead of using online tax software or waiting in line at one of the large national firms, come see us for tax expertise and a modern service model.
- 1. Contact Dukhon Tax and Accounting by
PHONE: 617 651 0531
EMAIL: [email protected]
ONLINE FORM: Click Here - We will register you for access to our client portal and ask you a few questions.
- Upload your tax forms (W-2s, 1098-T, Student Loan Interest Statements)
- We prepare your return and you receive your refund by direct deposit (check, direct debit, and other options available too).
Also, in most cases you can have the return prepared without paying any money upfront. We can withhold our fee from your refund.
Fast and accurate tax refunds - make sure you get all the money that is owed to you.
We look forward to serving our local student population and all of our clients during this tax season!
Sincerely,
The Staff at Dukhon Tax and Accounting
*Basic return are 3 or less W-2s, education credit, student loan interest, and no other deductions or attached form schedules. Valid student ID required. Offer lasts 02/01/2014 to 02/28/2014, please contact our office during that time.