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And you may have filed an extension and you want to relax yes? Sorry but one thing to bear in mind is that an extension is not a free ride. If you are a tax payer who owes tax then you will still be liable to pay that tax, plus penalties and interest.
So OK, you have the extension now what? Easy work to get the tax filing done asap!
Then relax just a bit!
(remember its not a free ride for those who filed a corporate extension either)
During Tax season, many taxpayers looking to have their taxes filed complain about tax preparation “schemes” and scammers. Some scammers deliberately collect identification numbers and Social Security information, which is consequently then used to steal people’s money or identities.
Taxpayers need to be alert to tax preparation businesses that suddenly pop up and offer very low fees to get people through the door, but then increase the final fee, claiming the tax return was more involved than anticipated, or to a so called tax preparer who electronically withdraws more than the agreed upon fee without notice to the consumer.
As people look for help in filing their taxes, we suggest to follow these simple guidelines:
• Use only recognizable and established companies
• Check the registered tax preparer's qualifications and experience
• Ask for a written estimate of all fees
• Avoid those who base their fees on a percentage of your refund
• Make sure the tax preparer is accessible, even after the April due date
• Never sign a blank return
• Review entire return before signing
• Make sure the preparer signs the tax form and includes a Preparer Tax Identification Number, or PTIN
• Avoid "too good to be true" promises, as they are too good to be true.
Taxpayers should also beware of refund anticipation loans (RAL’s) and refund anticipation checks, RAL's are often marketed as "instant" refunds but may actually turn out to be high cost loans that come with fees and interest that reduce the amount of any refund.
You can avoid the costs of refund anticipation loans and checks by filing return electronically and having refunds either mailed or directly deposited into your own bank account.
Remember, all paid preparers must have a Preparer Tax Identification Number before preparing returns, so you must ask to see verification of this before you go any further with them, if they avoid this subject walk away fast.
Also if you plan to use a CPA, be aware not all CPA's are tax experts. Yes a CPA may prepare and sign a tax form, however Tax is a specialist area that not every CPA is aware of. Another source of good tax preparation help is that of the Enrolled Agent or EA. All EA's are certified tax expert and specialize in Tax matters having sat and passed board tests.
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For many taxpayers it means diving into our records and working out how to complete ever more complicated tax returns that we immediatly throw up their hands in frustration.
At this point many will come to the conclusion that hiring a professional tax return professional (with more than a months training) is a smart move, someone who works with tax laws day in day out and is immersed in the latest changes and updates the IRS dish out.
Fortunatly, working with an experienced and licenced tax preparer, Tax Accountant or Enrolled Agent is an affordable option for most situations, costing an average of $246 (source National Soc of Accountants) to prepare an itemized 1040 schedule A and statre tax return (if applicable). If that tax professional can find even one extra deduction or credit that you the taxpayer may of missed, then that can quickly pay for any preparation fee.
Using a Tax professional is certainly value for money when you consider the time it usually takes you to complete a return (even using popular software). just understanding directions takes hours, even before you enter any numbers.
The smart move is let a professional work for you.
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You must file your 2011 return by midnight on the 15th.
This is a hard deadline that should not be missed
If you under-estimated the amount of money you owed back in April, it's going to cost you unfortunatly.
The late payment penalty is one-half percent a month of any unpaid balance. Midnight on October 15th is the deadline and you can still file electronically. We recommend, you get to this now either using the self preparation software like TurboTax or better still work with a local service provider to prepare and file for you. Just make sure they are reputable and can show you a valid PTIN or tax preparation number.
Failure to file return / Late filing penalty (Section 6651(a)(1) )
5% of unpaid balance for each month or part of a month the return is late. Maximum 25%. If the return is more than 60 days late, the minimum penalty is the lesser of $135 or tax due. There is no penalty if the return shows a refund. If the taxpayer is subject to failure to file and failure to pay penalties for the same month, the failure to file penalty is reduced by the failure to pay penalty.
Failure to pay tax / Late payment penalty (Section 6651(a)(2) )
0.5% of unpaid balance for each month or part of a month there is an unpaid balance. Maximum 25%. The penalty is half the usual rate for any months an installment agreement is in effect.
Know your exposure to tax penalties for late filing, late payment, and others.
Fraudulent failure to file tax return ( Section 6651(f) )
Section 6651(a)(1) penalty is replaced with 15% of tax per month not to exceed 75% of tax.
Underpayment of estimated tax by individuals (Section 6654)
Interest at federal rate for underpayments applied to the underpaid amount for the number of days late. (Changes by quarter. 4-6% on average)
Willful failure to pay tax or file return (Section 7203)
Misdemeanor—up to $25,000 fine, one year in prison or both; $100,000 for corporations
Even if it’s close to the deadline which it is, we can help. If you’d like to consider our services, please contact us at 832.426.3845 or visit http://www.simply-bookkeeping.com/tax-preparation/
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The best use of time for an efficient and effective business owner is to develop and manage an organization focused on sales growth and profitability. Following closely on its heals is the need to navigate successfully through what is, the maze of tax regulation and compliance as well as bookkeeping and reporting processes required to measure and manage effectively.
It makes good business sense no matter the size of the business to work with a professional as part of the team, as we all know that keeping track of your business accounts is boring and something many business owners mistakenly put on the back burner.
However, being able to make sense of your books is a key aspect of any successful business, not just when it is time to prepare taxes, but also helps to understand the overall performance of any company; identifying areas of concern as well as areas were your company is doing well.
All of the focus on bookkeeping and its underlying processes results in a complete and clear view of the health of the business and has a direct impact on its long-term future growth. Bookkeeping, analysis and tax may not be exciting and certainly not the reason you signed up to be your own boss in the first place, however take it seriously and work with bookkeeping and tax experts that understand what needs to be done and it will provide a great return over time. No matter how you decide to do your books and taxes, just ensure you manage the process right.
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