As I write this it is the March 21 - the second day of spring. Also as I write this we are having the 4th nor’easter of the month (yes, month - not year) and the largest snowfall of the season!
But on to a more pleasant subject - income taxes. Was that a sigh I just heard? It is related to organizing you know.
I know that earlier in the year I offered some advice about organizing your papers to do your income taxes this year and to help you do them next year, but this is some encouragement to actually file your taxes. I am aiming this at those of you in the U.S. as that is where I am and the taxes I know about. Again, while I am an accountant and a tax preparer not all advice applies to everyone and you should consult someone about your personal situation and not rely on my comments.
I am going to start with past years’ tax returns. I see you looking around as if to say - “who me?”. Okay I am just imagining that your are doing so.
I have a good friend - the best friend I have had other than family members. She was always one of those last minute filers. Then her husband was unwell and they were also moving their home of decades to another state. She settled her husband into their new home and then had to deal with everything in the old home. She runs a home based online business and the entire house was filled with inventory which had to be moved, plus the normal items one accumulates over decades.
Due to all of this going on at once, she and her husband were not able to file their taxes on time for 2014 - the last year they were in their old home - and I prepared and they filed extensions so they could file later in the year. Of course with the move, the tax items were missing and the return was never prepared. The next year there were medical problems and again, extensions were filed, but no return filed and the same for 2016. I recently contacted her and reminded her that if she did not file her 2014 by April 17 of this year she would lose her refund for 2014. She managed to find the paperwork and the return is out to her for them to sign and file. This also motivated her to find and send me the info for 2015 and 2016 which I will also prepare and send to them.
Do you have old tax returns which have never been filed? You really should file them. If you are entitled to a refund you have 3 years after the due date of the return to file it and still receive the refund. No matter what your politics are - do you really want to let the government keep money owed back to you? In this case the 2014 return was due in April 2015, so if it was not filed by the tax date this year - 3 years after the due date - they would have lost their refund - and so will you if you have one coming and don’t file the return.
Oh, and if you don’t file a return - on time, on extension, or late - you know those rules that the government can’t come after you for taxes still owed to them after a certain period of time - it doesn’t apply if you never filed the return on which they are owed!
So file your old returns that have not been filed - believe me you will sleep better. Then file the return due this April 17 on time. Find the papers now and get the return done on time. If you really can’t get it done on time - file for an extension - it is easy to do this both for IRS and separately for states that have income taxes also. Extension is automatic for 6 months until October 15 when you file the paperwork for IRS and most if not all states with income tax also. But then, make sure you get your paperwork together - if you owe money when you fill you will pay penalty and interest and if you are entitled to a refund - you don’t get interest on it - so get it sooner rather than later.
In any of the above cases, if you are missing information you can request a print out of your account from IRS by telephone or with a form online or by mail to help you.
THOUGHT OF THE WEEK -
If your tax information is a mess - vow to do better this year- start collecting related papers, even if it just to throw it all in a single file folder or into the traditional tax information shoe box. (No really, if you watch old television shows you will hear the shoe box mentioned as where the tax papers are accumulated during the year.
We all hate taxes (yes, even accountants hate dealing with their own taxes - it is the hardest return I do as I have to do the work on the return that I do for others plus I have to do the work they do to prepare for me for my own taxes) - but they do have to be done and the sooner the better and the less complications.
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