Once the regular tax filing season passes, we here take a deep breath of relief as the deadline pressure eases and a much is taken off our plates. This is not the case for everyone, though, as those who did not file can feel the pressure and worry of what happens now since they did not.

Well let’s start off with really good news – if you are owed a refund, there generally will be no penalty for not having filed on time. For people in that situation, the IRS is largely happy if you don’t file, for then it doesn’t have to send you that refund money. So, if you think you may be getting a refund and you just didn’t file, you should, for that money can still be yours.

Of course, most who do not file their taxes on time are not in this position. A lot of people who do not file neglect to do so because they fear they will be unable to pay what they owe at the end of the process. First, know that if you are in this situation, you are only setting things up to snowball. You will face penalties for not filing, interest for not paying on time, and once you ignore this once, it becomes easier to push it off in future tax years – further snowballing the penalties, interest, and total you owe to the IRS.

Not filing your taxes is likely not going to help you avoid the bill, either. If you owe taxes, it’s because you did not pay what you owe on money you received – and all those forms you got that say you received this money, the IRS has those, too. Failing to file is not going to keep those powers-that-be from knowing that you should have done so and what you should have paid. 

In fact, without filing you are only going to owe more in taxes because the IRS may know of all the money you received, but it will not know about all the deductions for which you could be eligible to lower your burden.

Beyond that, there may be payment options that you are unaware of that will enhance your ability to pay beyond what you think it is. We cannot guarantee some wonderful solution to whatever issue you are fearing, but we can guarantee more concrete numbers and possible solutions.

If you are reading this after having not filed your taxes, not filed an extension, hiding, and just hoping that this doesn’t come back and bite you in the future, well, we can’t make you act differently.  But we can offer the opportunity for more clarity and help you get a better grip on where you really do stand. So please reach out if you would like to gain this.

As we rapidly approach the end of tax season, it is inevitable that many people have questions about audits. Even if someone has never had to undergo one, it feels like a big, scary thing that everyone wants to avoid. And although there is no way to ensure that you will be forever ‘audit-proof,’ there steps you can take to remain confident your return will hold up to an audit.

The first step here is to be honest. If you report all your income and only claim legitimate deductions, then you have followed the rules and there is nothing to catch you on. The next step, though, is to make sure that you can document all of this, too. It is one thing to have legitimate deductions, it is another to have the receipts and/or paperwork that back it up. Just know as a rule, anything that you cannot back up will be disallowed by an auditor.

I am not going to be so naïve as to pretend that I don’t know people are fudging some numbers on their returns. I even believe that a lot of fudging is genuine as in – “I made this purchase but don’t have the receipt” or “I made a donation in cash at an event.” That is where the deductions can be legitimate but cannot be proven.  At that point, you are kind of playing the audit lottery, assuming you’ll slide under the radar and not be called out to prove the numbers.

And of course, an overwhelming majority of tax returns are not audited, so much of this passes the without special notice. A lot of this is done with smaller numbers, which makes it easier to slip by. Once numbers start to get beyond the norm, though, that is when they can start to raise some flags.  And if you want a little more view into that process, you can read this recent article from CNBC.

Before I leave here, though, I want to mention the income side of the equation a little more. For sure, deductions can easily be transactions that take place outside the purview of tax forms, which is where a lot of that fudging exists. The money you have earned, though, is essentially already reported to the IRS. If you receive a 1099 for money you didn’t realize was going to be taxed, a form also went to the IRS. It is going to be more difficult to get away with thinking you can simply not report that to avoid the taxes.

In closing, remember the best way to feel comfortable when thinking about an audit is to do things the right way when you file your return.  And if you need any help with that, please do not hesitate to contact us.

There are times when we must discuss things that we have discussed before. It is part of the cyclical nature of much of what we do. Things happen year after year and they are big enough to warrant discussion and/or reminding. Now, as we approach the end of tax season, we are reaching one of those conversations again.

The start of the conversation is a bit new (or back to normal), though, for after two wacky years, there is not an extended tax deadline. This means that the regular deadline is fast approaching – less than two weeks away – on April 18.

Of course, with that always comes talk of extensions. And these can be great things for many reasons. There are plenty of legitimate situations that will cause people to not be able to file their taxes on time. Maybe you are having issues with some forms, maybe serious life issues got in the way, or maybe you fit in one of dozens of other stories as to why that deadline has become unmanageable.  No matter which one it is, it is not difficult to get yourself another six months of leeway to get that tax return filed.

Now comes the part that we have to drive home whenever speaking about this, though. When you receive an extension, you are getting an extension to file, NOT an extension to pay any taxes you owe. So of all those legitimate reasons why someone may need an extension, getting more time to pay what you owe is not one of them.

For even if you get an extension and do not file this month, penalties and interest will start accruing on any money you owe once the original deadline is missed.  This means that not only is needing more time to pay not a good reason to get an extension, but it will only result in you owing more money.

No matter where you find yourself in the process, though, know that we are willing to help where we can. Do you need assistance in getting an extension, let us know.  Do you need some guidance on how to handle a tax debt, let us know.

Now, keep in mind that we are in that crunch time and our availability may be limited. So we may need to ask for a little more patience than usual, but know that with a little understanding from both sides we will work to see that you receive what you need.