April 15 is just 7 days away, and join us with tips for our listeners who have procrastinated.
That’s right, Skip! If you have been putting off your taxes, you only have a week left to file, so it is time to buckle down and get them done.
I have a week left. What’s the first step I should take?
First, get organized. Gather all of your documents, receipts and statements together. You will need your W2 form from your employer, or your 1099 form if you are a contractor. These should have been mailed to you in late January or February. Have last year’s return on hand to ensure you have the documents to support claims you made last year. Finally, if you’re itemizing, remember that the 2017 tax bill raised the standard deduction and eliminated some past deductions. That said, you want to have the following: form 1098, Mortgage Interest Statement, if you own a home. This allows you to deducting interest paid on a loan for your own home. Also, gather receipts for purchases and payments related to business expenses, health care and childcare, tuition costs, contributions to retirement accounts, and charitable giving. Once you have all of this information, then you can start filling out your tax forms.
What if I am putting off taxes because I can’t pay?
You must file your taxes, even if you cannot pay. You still have to collect all of your paperwork, fill out the forms, and file them. If necessary, you can file for an extension. To do this, go to the IRS website and download form 4868, which will request the IRS to allow you another six months to submit your taxes. Anyone can file for an extension, but you need to submit the paperwork by tax day and pay what you can.
Failing to file your taxes is a very big deal. If you do not file or apply for an extension because you cannot pay, the IRS will charge you a failure-to-file penalty, which is usually 5% of the unpaid taxes for each month your return is late, up to 25% of your bill
What are my options if I cannot pay the full amount?
First, pay as much as you can afford. If you only need a little time to come up with the rest, you can request a short extension of 60 to 120 days. You will be charged penalties and interest, but at a lower rate than you would if you are outstanding, and or file late. If that is not an option, the IRS also offers installment plans. This requires you to pay a fee to sign up, but will let you to pay in smaller monthly amounts. These plans require approval, and must be paid off within 3 years. If you are owed a refund, you won’t be penalized for not filing. However, Uncle Same will not send you your refund until you file your taxes. And if you keep missing tax day, you won’t get your refund back, period. If you ignore April 15 for three straight years, the IRS will keep your money.
Do we have a higher chance of being audited because if we have procrastinated?
Many people believe you are more likely to get audited if you file late or if you file for an extension, but most experts do not believe this to be the case. From what we know, an extension might actually decrease your chances of getting audited, as it demonstrates you’re are taking the time to ensure that things are done correctly.
What will get you audited is not filing your tax returns!
Should late filers be aware of scammers?
Tax scammers target everyone, but at this time of year fraudsters take advantage of people’s anxieties about taxes and filing late. The two most common methods are phone scams and phishing scams. Phone scams tend to be calls from individuals who impersonate IRS or other government bureau staff. Phishing scams also play on anxieties. If someone calls threatening to arrest you, deport you or revoke your license over a tax bill, don’t believe it. Fraudsters typically call claiming to represent the IRS or law enforcement. Phishing scams target your personal information by email. If an email or website asks for your personal information, be wary. One particular scam to watch out for uses your own bank account. Do not give out your personal information. Remember, the IRS will never contact you by phone or email. If you receive such a call or email, report it to the IRS at 800-829-1040.
Thanks for the tax tips, Mellody.