Love it or hate it, tax time is looming large. (Not that we think many of you love it, unless of course you’re receiving a tidy sum in a refund). All through the winter, and into spring, you try to stop thinking about it (or you've completely forgotten), but the deadline is drawing very near. You are supposed to get your taxes filed before the 18th of April, and there's no time left to tip-toe around the topic. With just days to go, tax time is truly upon us! Do you need an extension?
Have you already filed? Then you are in the best place you can be right now! Filing early gets you in before most others, meaning everything gets taken care of and doesn't need your attention. Early filers avoid all the stress of a looming deadline. They often have an easier time getting an appointment with their CPA or tax preparer. Additionally, filing early reduces the risk of tax identity theft. Best of all, you get ahead of processing delays, especially if you’re getting a refund.
Procrastinators beware. Many of us put off filing our taxes until the last minute. Why? One common reason for delaying is knowing that you need to pay. However, the sooner you get your tax return filed, you can set up a payment plan and handle the debt. Unfortunately, nearly half the people who put off filing their taxes do so because they find the process itself too stressful and complicated. Ironically, while attempting to avoid stress, the longer you wait, the more likely you'll experience the anxiety associated with being unable to meet a deadline.
If you know you won't be able to file your tax return by the 18th of April, you need to file an extension to avoid any penalties. Filing an extension is a fairly straightforward process, and it's usually the best solution if you aren't ready in April. However, if you owe the IRS or the state money, you still need to pay by the 18th of April, because the extension is only for filing your taxes, not for paying what you owe. The extension will give you more time to gather or recheck your tax documentation, but it does not give you more time to pay. Extensions are often requested when waiting for a corrected W2 form, or a missing Form 1099.
One of the toughest parts of tax time is owing money to the IRS that you simply do not have. While it's understandable that your first instinct might be to hide and remain silent, that is not the way to go. Setting up a payment plan is best. If the amount owed can be paid within 180 days (six months), no fee or approval is necessary. If the amount owed is larger than can be paid in 180 days, you need to implement a payment plan. For most people, the IRS requires a direct debit from your bank or employer. There are other steps to follow. The IRS offers information to help you get started online, or you can ask your tax preparer or CPA for professional help to set up the payment plan.
To avoid the anxiety related to tax preparation, consult a CPA who can help advise you on the best course of action, and help you plan for next year’s taxes as well. At Myrick CPA, we conduct personal meetings on Zoom and documents can be submitted electronically. If you're ready to simplify your tax preparation, and reduce your stress levels around tax season, Myrick CPA can help.