Tax filing season is here again. If you haven’t done so already, you’ll want to start pulling things together, including a copy of last year’s tax return, W-2s, 1099s and deduction records. You’ll need these records whether you’re preparing your own return or paying someone to do your taxes for you.
Here are some tips that can save you time and money:
• Don’t procrastinate. The filing deadline for most individuals is Tuesday, April 18, 2017. That’s because April 15 falls on a Saturday, and Emancipation Day, a legal holiday in Washington, D.C., is celebrated on Monday, April 17. Unlike last year, there’s no extra time for residents of Massachusetts or Maine to file because Patriots’ Day (a holiday in those two states) falls on April 17, the same day as Emancipation Day.
• File for an extension, using IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, if you don’t think you can file your federal income tax return by the due date. Filing this form will give you an additional six months (until Oct. 16, 2017) to file your federal income tax return. You can also file for an extension electronically – Form 4868 includes instructions on how to do so.
But remember: Filing for an automatic extension does not provide any additional time to pay your taxes! When you file for an extension, you must estimate the amount of tax you will owe and pay this amount by the April due date. If you don’t pay the amount you’ve estimated, you may owe interest and penalties. In fact, if the IRS believes that your estimate is not reasonable, it may void your extension.
• One of the biggest mistakes you can make is not filing your return because you owe money. If your return shows a balance due, file and pay the amount due in full by the due date, if possible. If there’s no way that you can pay what you owe, file the return and pay as much as you can. You’ll still owe interest and possibly penalties on the unpaid tax, but you’ll limit the penalties assessed by filing your return on time, and you may be able to work with the IRS to pay the remaining balance (options may include installment payments).
• The IRS is stepping up efforts to combat identity theft and tax refund fraud. New, more aggressive filters that are intended to curtail fraudulent refunds may inadvertently delay some legitimate refund requests. In fact, beginning this year, a new law requires the IRS to hold refunds on all tax returns claiming the earned income tax credit or the refundable portion of the Child Tax Credit until at least Feb.15. Most filers, though, can expect a refund check to be issued within 21 days of the IRS receiving a return.
BARBARA KENERSON is first vice president/Investments at Janney Montgomery Scott LLC and can be reached at BarbaraKenerson.com.