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With the clock about to strike midnight on the 2013 Tax Year Filing season, the following is a quick list of tax tips for all you last minute filers out there:
April 15th Deadline
Yes, we all know the saying “Death & Taxes…”. And nothing drums up the cold sweats and association with taxes like the April 15th deadline. However, here is something that many taxpayers do not know: This deadline is only if you OWE taxes to the IRS. If you are due a refund from the IRS, you actually have 3 full years from the April 15th deadline to claim and receive your refund before it becomes the property of the U.S. Government. So, as long as you file your 2013 tax return by April 15th, 2017 you will get your refund. There are of course, many reasons to file your 2013 tax return before the deadline. It’s your money! So don’t let the government hold on to it especially when they do not have to pay interest on it. If you owe, and you do not have all of your tax documents ready, you can always file an extension. Extensions must also be filed before the April 15th deadline. REMEMBER: An extension is only an extension to file your final tax return, NOT to pay the taxes you owe. Therefore, expect to send payment for the estimated amount of taxes you owe along with any extension.
Beware of IRS Scams
IRS & Tax related Scams have been steadily increasing over the last few years. The most common scam going around is IRS impersonators contacting unsuspecting taxpayers and getting them to divulge their confidential personal information which can be used to open up credit cards in the victims name and/or to a file a fraudulent tax return in their name in order to steal refunds. NOTE: The IRS will NEVER initiate contact with your via email, phone, fax or text. They will always send you a written notification with instructions. Even if you receive written communication, double check that the contact information on the letter matches the IRS contact information from the IRS website. If you think that you are the target of a tax related scam, report it to phishing@irs.gov.
Sign Your Return & Mail To Correct Address
While this may sound trivial, many taxpayers forget to sign their tax returns! Your tax return is technically not considered filed if it is not signed. While the majority of tax returns are filed electronically, there are still many reasons why a return would be filed as paper. Furthermore, if you had your return prepared by a professional, be sure that they signed the return as well. While the taxpayer is ultimately responsible for what is listed on their return, a common scam that many “professionals” use to avoid any liability is to file a tax return as “self-prepared”. In other words, the IRS thinks that the taxpayer prepared and filed the tax return themselves when in reality it was filed by a paid income tax preparer. So be sure to check for all appropriate signatures! Furthermore, be sure you are mailing your tax return to the right IRS processing center. The IRS tends to change their mailing addresses annually and some have separate mailing addresses for refunds and taxes due. Here is a list of all the IRS tax processing centers.
Keep Your Tax Records
So you just sent in your taxes and now you can throw all of your W2s, 1099s, receipts & other tax related documentation into the fireplace, right? WRONG! Depending on your situation, the IRS says to keep all of your tax records between 3 & 6 years. So, just to be on the safe side, keep all of your tax records for at least 6 years. Sometimes it could take years before the IRS notifies you with an issue and/or adjustment on your tax return. If you plan on contesting changes in the IRS’ favor, you’ll need your backup documentation. Recent budget cuts to the IRS will probably delay the notification process even more.
File With A Tax Professional
While millions of taxpayers are electing to forego using a tax professional in favor of filing themselves, the numbers don’t add up. A couple of years ago R&G Brenner investigated The True Cost Of Preparing Your Own Tax Return and found that taxpayers who filed themselves were losing an average of $594 in refunds as opposed to using a Tax Professional. Similarly, H&R Block is running ads this year that found 1 in 5 taxpayers who prepares their own taxes are not claiming all the deductions they are entitled to and are losing $490 in refunds. Now there are many taxpayers who have very simple returns (standard deductions, no house, no kids, etc) and can easily file themselves. However, the moment your tax return gets even a little bit complicated, you should seek professional help. If you are going to Itemize Deductions (Schedule A), claim mortgage interest, have children (Earned Income Tax Credit), deduct business expenses (Schedule C), have rental income (Schedule E), or other complex tax positions, it is almost never a good idea to prepare your own tax return.
If you would like information about R&G Brenner, our services or if you need any tax assistance before or after the April 15th deadline, please feel free to contact us here, or call us toll free at (888) APRIL-15.