October 17th Tax tips if you filed for an extension and extra time in Hurricane Matthew sufferers
Did you file for an extension of your 2015 Tax Return?
Unlike previous years, the deadline for extended 2015 tax returns is October 17th, 2016. What does this mean? It means that you have an extra two days to file your 2015 tax return, if you filed an extension. See below for more details on this subject. Did you suffer from Hurricane Matthew recently?
Did you suffer from Hurricane Matthew or any recent natural disaster?
a note to people who live in areas in the U.S. where disasters have hit. You will get extra time to file — as long as you had already put your personal tax returns on extension. With Hurricane Matthew still cutting a path of destruction along the eastern part of the U.S., the IRS is expected to announce the details of the special extensions shortly.
So far, the IRS has just announced that storm victims in North Carolina will have until March 15, 2017 to file certain individual and business tax returns. This extension also applies to relief workers who are affiliated with a recognized government or philanthropic organization. Expect similar extensions for other areas hit by Hurricane Matthew.
Here are the special provisions available to victims in the various disaster areas. In addition to the floods and devastation of Hurricane Matthew, there are droughts in 37 states and Puerto Rico. The IRS has provided additional time for farmers and ranchers forced to sell livestock prematurely, due to the drought. This applies to animals held for draft, dairy or breeding purposes. Normally, taxpayers have four years to report the income from the sale or to replace the livestock they have sold. The IRS has allowed filers an additional year – until Dec. 31, 2017. This additional time impacts drought sales that occurred during 2012.
Tips for Filing your October 17, 2016 Tax Return:
• Don’t wait for the last hour of the deadline to file online. If your software doesn’t work, or you have internet problems, you will end up missing the deadline.
• If you are planning to file on paper, check with your local U.S. Post Office facilities to see which branches will be post-marking mail up until midnight. Do this in advance, so you know exactly where to go. And show up at least a half hour before closing.
• If you don’t have everything you need in order to file a complete return, file anyway. There’s a 5% per month late filing penalty if you miss the Oct. 17 deadline. There is no late filing penalty if you file something.
• Don’t file a frivolous return just to file something. Make reasonable estimates of the missing income, expense, or tax basis of assets you sold. Make written notes about how you arrived at those estimates and put those notes into the tax return files you keep at home. Better yet, include a Form 8275 Disclosure Statement and attach your explanations. That will reduce your potential audit risk to three years, instead of six years, if your estimates are wrong.
• When you get the correct information later, file an amended tax return. Remember, you have up to three years to file an amended return, after you file the original return.
• When working with a tax professional, do not walk into his or her office at the last minute and expect them to appreciate you. They are human, and their nerves are already stretched to the limit trying to help procrastinators. Expect to pay huge rush fees — or expect to be filing late. After all, while you might get away with filing a quick and sloppy tax return – they must do a diligent job.
• If you need to make a payment with your tax return, use the IRS’ Direct Pay tool. It’s free, draws the money directly from your account, and gives you proof that the IRS received your payment — and shows how the payment was applied.
• Don’t have the money in your bank account right now? Well, you can pay by credit card. The IRS lists three companies you can use. The fees range from 1.87% to 2.25%, with the lowest fee being paid to Pay1040.com — 1.87%.
Note: This page has debit card payment options. They come with a fee. If you have enough money in your bank account to use a debit card, consider using the Direct-Pay link above.
• What if you don’t have the money to pay the taxes that are due? That’s one of the biggest reasons people avoid filing their tax returns. File anyway. You will have to pay those taxes sooner or later. It’s so much easier to pay the balance due without 25% worth of late filing penalties – and the interest on those penalties.
• If you can ultimately find the funds to pay your balance due within about three months, start setting the money aside to do that. If not, you can always arrange for an installment agreement with the IRS using their Streamlined Installment Agreement tool online. This should work for most taxpayers.
If you are in compliance (all tax returns filed), you may qualify for automatic, online approval if your taxes, penalties and interest are $100,000 or less. The IRS just announced this new limit (up from $50,000) and an 84-month payment period.
• Whatever you file, keep a printed (or PDF) copy of your tax returns and all the forms, notes, 1099s, W-2s, etc. that went into producing the information reported on your tax return. Make copies of all payments — printing out any online payments.
Arizona has an amnesty program for taxpayers owing individual and corporate taxes. File the application before Oct. 31, 2016, and you can avoid penalties and interest on the taxes you owe. This applies to residents and non-residents. Better news, if you apply on time, you will get up to 24 months to pay — through Oct. 31, 2018.
If you have Individual Taxpayer ID Number:
The PATH Act of 2015 set some drastic limitations on tax credits for people who have ITINs (Individual Taxpayer ID Numbers). You are no longer eligible for any earned income credits or American Opportunity Credits. And if you get a Social Security number after the tax filing period, you won’t be able to amend to get those credits. So…now is the time for ITIN holders who have been putting off getting Green Cards to apply immediately. And once you’ve started the Green Card application, do not file your 2016 tax return until you have been approved – or Oct. 15, 2017, whichever comes first.
For this week, though, the most important thing for you to know is — file your tax return, whether you’re ready or not. Don’t put it off because you’re still missing key information. File now and avoid those nasty penalties. Remember, you do have three years to correct your estimates.