Taxes

In years past, the IRS had a 2 part system for filing on extension. They gave a 4-month automatic extension until August 15th, which most of us used! You could also request 2 additional months, but fewer people chose this option and were able to meet the August maninclock.jpg15th deadline. The paperwork was a bit tedious. The IRS asked for an explanation of why you were filing late. How embarrassing.

You may have noticed in 2005 the IRS changed their policy and simplified the process. They currently offer a 6-month automatic extension until October 15th. And they eliminated the need for a signature and an explanation on the paperwork.

Which leads us here”the years second most dreaded deadline is quickly approaching. Have you filed yet? It’s time to gather your documents and get calculating. Here’s a simple plan to help you file on time.

1. Gather your documents together. You’ll need your 1099s, W-2s, interest and dividend statements, and K-1 schedules. Check them for errors. Have the social security numbers of your dependents and a copy of the last return you filed. Remember, you may need items that are not on this list.

2. Decide how you’ll file. Will you prepare hire a tax professional or prepare your return yourself? The IRS reports nearly 1.8 million tax payers will be filing by the extended deadline. If you’re hiring a tax pro, call them today and schedule your appointment.

If you choose to prepare your returns yourself, will you file manually or electronically? Electronic filing can be a blessing for those of us who embrace technology. But for some of us, it’s more trouble than it’s worth. Decide in advance, which will be less frustrating for you.

If you are using the paper and pencil method, gather your forms from the IRS website.

Going paperless? Choose from many software programs or on-line options. The IRS even offers free online filing for tax payers with an Adjusted Gross Income of $50,000 or less. (include link)

Were you planning on using Tele-file, the IRS telephone filing option? Unfortunately, you’ll need to choose another option because it is no longer available.

3. Familiarize yourself with the updates to tax laws specific to your filing situation. Remember, if your financial position has changed your tax liabilities may have changed too. The National Association of Tax Professionals provides a helpful summary of updates to the tax laws.

4. Draft your calculations. Use last year’s tax return as a guide. Take your time and do not rush. Breezing through your tax return could save you time, but you could miss important deduction with costly consequences.

5. Proof and edit your tax return. Check, check, and triple check your math! I know it sounds simple but I’ll just say it anyhow–use a calculator. Compare your figures to last years. Any major differences may indicate that you’ve overlooked something; it could remind you of deductions, or illuminate inconsistencies.

Put your return aside for one day. Don’t look at them or think about them. Then go back the following day. Giving yourself a fresh look at your return can be extremely beneficial. You just may see something you overlooked.

6. Finalize your return. No more pencil. Put it in ink, or click “submit”! Make sure you sign, date and include any payment.

7. Head to the post office! The good news is October 15th falls on a Sunday this year. So tax returns must be postmarked by midnight on Monday the 16th. Find the post office near you that stays open the latest and can postmark your mail the same day, even if its after 5 pm!

If you take one step each day you’ll be alright! Start today and pace yourself. Once your return is in the mailbox mark this one off your to do list. Use the momentum from this accomplishment to propel you forward. Keep going and get organized for your 2006 taxes.

If you get stuck the IRS offers free assistance for taxpayers filing late returns.

Or simply contact me with any questions regarding your tax liabilities, returns or calculations.