Thursday, April 12, 2012

Last minute filing tips

In a couple days, tax returns for individuals, partnerships, trusts and estates are due.  This year it's April 17. Usually taxes are always due on April 15, but this year it falls on a Sunday.  So one would think they are due on Monday, the 16th.  However, that is Emancipation Day in the Washington, D.C., so the whole country gets to skip right on over to April 17 for tax day. So much for simplifying the tax code.

If you haven't filed your taxes yet, you are not alone.  Procrastination, vacations, family emergencies, hectic schedules all get in the way. The dog ate your W2? Call your employer and get a replacement. If you can't get to it in time, it may be the year to file an extension.

I haven't filed my tax returns yet.  By the time I get all my tax documents, so has everyone else. I get so overloaded with other tax returns I can't possibly get to it. So I do a rough estimate in January to see if I'm going to owe or not. My husband is self-employed, so we have quarterly estimates to pay as well.  I file an extension and include what I think I owe plus extra to cover the first quarter estimate.  When I file the taxes in May, I'll have the extra applied to 2012 and that (hopefully) will take care of the first quarterly payment.

If you haven't filed yet, here are my recommended priorities:
1) File your taxes
2) File an extension
3) Pay what you think you owe
4) If you can't pay the full amount, pay what you can and file and Installment Agreement Request

An extension is super-easy to file and it does not raise any kind of red flag whatsoever.  Form 4868 is available at  This form extends your due date to October 15. Keep in mind, the extension does not extend the due date of your balance due.  If you expect to owe, make sure you send a payment with your extension.  The Federal extension covers Ohio as well.  Most Ohio cities accept a copy of the extension when you eventually file that return.  However, if you live in Eastlake, know that they require a copy filed with them before April 17th.

If you know you are going to owe and you can't pay, DON'T IGNORE THE 17th.  That is the worst thing you can do.  The IRS has a hierarchy of penalties, and the most severe are the failure to file, then failure to pay. At least file an extension.

Similarly, if you have filed and you can't pay the whole amount, DON'T IGNORE THE 17th.  Pay something and fill out and Installment Agreement Request (Form 9465  With that you can choose how much you want to pay with the return, how much you can pay each month, the date each month you would like it to be due. The IRS charges $52 to set it up if you agree to have your payment automatically deducted from your bank account ($104 if you write a check each month). Interest and penalties will continue to accrue; however this is the lowest level of penalty.

PS. If you have a refund, there is no penalty for missing the April 17th filing deadline.  As a professional, I always recommend filing an extension even if you expect a refund - just in case.  It could turn out you owe on the Federal or Ohio unexpectedly. Think of it as a free insurance policy against those failure to file penalties.