Money Mondays: The procrastinator’s guide to filing

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  • There is absolutely no way that I will have all my stuff together in order to file on-time. What do I need to know in order to get an extension? And are extensions to extensions a possibility, just in case? Wayne— Las Vegas, NV

    I think this question is fascinating because we may have found the most interesting procrastinator on the planet, one who actually makes plans in order to facilitate his procrastination. Before we dive in to helping Wayne not tackle his taxes, I want to remind your listeners that there is still a bit of time to file and if you have the ability to do so you absolutely should. Filing your taxes today will mean that unlike Wayne you won’t have to deal with any of the following scenarios that are listed on the Form 4868 –which is the Application for Automatic Extension of Time To File:

    • “You will owe interest on any tax not paid by the regular due date of your return.”

    • There is a late payment penalty, usually in the amount of a “½ to 1% of any tax (other than estimated tax) not paid by April 17, 2012. It is charged for each month or part of a month the tax is unpaid. The maximum penalty is 25%.”

    • And if you choose not to file at all – “The late filing penalty … is usually 5% of the amount due for each month or part a month your return is late. The maximum penalty is 25%.” Specifically, “if your return is more than 60 days late, the minimum penalty is $135 or the balance of the tax due on your return, whichever is smaller.”

    You can save yourself all the resulting headaches and frustration by getting your return in today. So if you think you might be coming down with a cold, right now, you might want to give your company’s HR professional a call to let her know you will be “working from home” today.

    That said, it is understandable that some people simply have to file an extension. Perhaps paperwork from an employer wasn’t made available in a timely manner or you tried to take care of your taxes on your own and it proved to difficult, it happens. The later scenario is exactly why an article from U.S. News and World Report noted that 60% of taxpayers hire an accountant and another 22% use tax software.

    The process for filing an extension is super easy, maybe one of the easiest processes the government has ever created. I know this is difficult to believe especially knowing that the IRS is involved but it really is super simple. To show just how easy this is let me first give you a few facts.

    • The official tax code is approximately 72,536 pages long.
    • The Form 1040 with instructions is 102 pages.
    • The 1040EZ is 45 pages.
    • And if you just want to estimate your tax responsibility, grab a pencil and a calculator and kick off your shoes for a thoroughly gripping 12-page read with sections titled “when a penalty is applied” and “how to amend estimated tax payments”.

    By contrast the Application for Automatic Extension of Time To File U.S. Individual Income Tax Return (quite a mouthful) or simply the Form 4868 has a total of four pages, most of which simply tells you what to do once you finish filing the miniscule amount of paperwork that for the most part is asking for things like your name and your address. It is available at http://www.irs.gov, you’ll see the forms & publications link, in orange, on the upper left-hand side of that webpage.

    Sounds pretty simple, right? Well, the IRS has simplified it even further to ensure that you late filers actually do file.

    The IRS has set up a webpage at http://www.irs.gov/freefile where you will be shown how to file for an extension, for free, in as little as five minutes. So maybe you won’t need to call in sick today. And a great thing about filing electronically is that it virtually eliminates the possibility of errors, which can cause all sorts of issues that you don’t want to have to deal with. Those five minutes equates to an extra six months to get your taxes in order. And once you’ve finished you can call back your company’s HR professional and tell her about your remarkable recovery.

    I really have no idea how it can get any easier than that. Now for part two of Wayne’s question. When the middle of October rolls around, can he file for another extension and get himself another six months of not thinking about taxes?

    Unfortunately for Wayne an extension of the extension isn’t a possibility. And even if it was he would find himself with a lot of work on his hands since another six-month extension would put him right back to April 15th. Take care of your taxes Wayne, as soon as possible. PLAY AUDIO

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