Tax Day (generally April 15) has many similarities to Christmas Day: they both come once a year. Even though we know that Christmas Day is inevitable, many of us put off preparing for it until the last minute. Ask any CPA and you will hear numerous 'war stories' about frantic calls from clients on April 14. Both Christmas and Tax Day seem light years away until it's too late.
It's a little too early to tell whether Christmas Day will sneak up on you this year, but it's looking fairly certain that Tax Day will creep up on many of us. In an effort to stave off some of the inevitable Tax Day panic, what follows is a list of suggestions to help you keep cool under the pressure of tight deadlines - and save tax dollars in the process.
Before we start on the list, remember this year's deadline is a little later than normal. Thanks to Emancipation Day
, a public holiday celebrated in Washington, D.C., the Internal Revenue Service won't be working on April 16; therefore, this year's filing deadline will be Tuesday April 17.
If you haven't already done so, the first
thing you need to do in the next 17 days is put your tax information in order. Regardless of whether you extend or not, the U.S. government wants its share of your income no later than April 17. If you don't pay by then, you can expect to owe penalties and interest when you finally settle up for the year. The only way to minimize the possibility of underpaying your tax is to organize all of your important information to assist you in accurately estimating your taxable income.
Next (Item two
), you need to call your preparer and set an appointment to get your information turned in. While a tax professional will do everything possible to file your tax return timely, it falls on you to get that person the information they need in time to prepare the return. In your meeting, make sure to explain any unusual items and ask any questions you may have - and remember, there are no dumb questions.
on your list is to be proactive in minimizing your tax bill. While your tax preparer can and will ask numerous questions, the fact is that person is only human. Don't assume he or she will ask questions that will cover every possible tax deduction in the book, because most questionnaires are created around typical deductions and items of income. Unusual items can and sometimes do get overlooked. For example, if you bought a new car in 2006, the sales tax you paid may be deductible, but if you don't tell your tax preparer about the purchase, any possible deduction is lost. Perhaps you sold land at a loss or remodeled your home, on which you take a home office deduction. Anything you think may remotely have tax implications should be discussed with your adviser.
, keep a copy of any organizers or questionnaires you have completed for your preparer. Take time to read over the questionnaire daily and ask yourself if you may have missed anything. If so, determine the amount involved and notify your preparer immediately. Don't ever think it is too late to make changes to the return. Up until the time you put it in the mail, you can correct any errors you find. You would be surprised at how readily a tax professional will agree to make a correction to your return, especially when it saves you money.
, but certainly not final, thing you should do is make sure you deposit any retirement plan contributions before you file your return. If you take a deduction for retirement plan contributions on page one of Form 1040, or in Schedule C, you must fund the deduction before the return is filed. This might require you to extend your return to give you time to raise the funds, but better to extend than lose a deduction. Remember, however, that contributions to individual IRAs must be made by April 17.
Even though this "to do" list may keep you hopping over the next few weeks, relax….if necessary, you can always file an extension to keep the IRS happy. Don't let the looming deadline make you feel as though you are in a life or death situation, because you are not. Just get to work pulling your items of information together and try to be thorough. As always, if you need help, we are here to assist you with both tax filings and other financial and business matters.