What to Tell Your Clients Who Are Late to the Filing Party

It’s late filing season and there are roughly 40 million taxpayers that have yet to file their taxes. Are some of your clients included in that number? Here are some things to communicate to clients regarding extensions.

Automatic Extensions

There are some taxpayers in special situations that qualify for automatic extensions. That’s right, they don’t even have to ask! Taxpayers who qualify include:

• Victims of natural disasters
• Military personnel in Combat zones
• Taxpayers who live and work outside the U.S. and Puerto Rico

If any of your clients qualify, make sure to let them know they have extra time and encourage them to make an appointment before their specific deadlines.

Clients Who Owe the IRS

Your clients may have extra time to file, but you should urge them to pay the estimated tax as soon as possible. Currently, the interest rate is 4% per year, compounded daily, and the late payment penalty is 0.5% per month. That adds up quickly.

The IRS allows you to submit an estimated tax payment when you file form 4868 (Application of Automatic Extension of Time to File U.S.) to get an extension. IRS Direct Pay allows taxpayers to submit estimated tax payments for free. Any payment made with an extension request will reduce or eliminate the interest and late payment penalties associated with payments made after April 18th.

Reaching out to late filers

Record numbers of Americans waited until the last minute to file their tax returns this year and many of them filed extensions instead of the completed returns.  These taxpayers still need to file their 2016 returns. Others could need to file amended returns because they rushed through the last-minute process.

Seize the opportunity to get in front of them!  Communicate now; don’t wait until the October 15^th deadline approaches.  Here are some ways to reach out to late filers:

1. Pick up the phone. Give your clients a courtesy call to remind them that they need to come in to file their taxes.
2. Email. Send personal email reminders to clients you still haven’t heard from reminding them of the deadline. Make sure you include information about penalties and about what they need to bring with them to their appointment.
3. Send an email newsletter with information about filing extensions and amending returns. Educating clients is important. Encourage your list to share the information with friends who may need to amend or still need to file. Remind them of your referral program if you have one.
4. Post information about filing after the deadline to all of your social media channels to catch clients there or pick up new ones.

Tax season is not quite over yet! Make sure you’re continuing to educate clients and keep driving late filers through your doors.

source http://www.theincometaxschool.com/blog/late-filers/

4 moves to make now if you missed the tax-filing deadline

Some folks didn't file their federal taxes on April 18. Judging from social media, much of the deadline busting was the fault of cats.

"Can't claim my cats as dependents? Well I can't file then," Tweeted @deedles420. Sorry, Dee, but while a dependent doesn't have to be a blood relative, your fur babies don't pass tax muster.

Dee was not alone. The Twitter hashtag #ExcusesForNotFilingTaxes underscored the internet's reputation as cat loving and apparently tax hating.

"Still waiting for cats' social security numbers," Tweeted @growingupZee. Good point, Zee, since those nine official digits from the Social Security Administration are key to tax filing. But that applies to people, not felines.

"The cat ate the taxes," declared @BeccaJM_. Nice try, Becca, but that didn't work with the dog and your homework either.  

And another animal snuck into the no-filing tax excuse stream:

"Squirrel!" announced the distracted @johnyjuice. Uh, no. 

Although in some specific cases animals can count as tax breaks, the critter claims on Twitter won't fly with the Internal Revenue Service.

Other sundry no-filing reasons: Neither will the one from a Star Wars fan who didn't file because of travel abroad.

"I have cruises booked nonstop for the year so I basically live in international water," said @ICouldBeAJedi. 

Even if you take the ship all the way across the Atlantic and settle there, U.S. citizens living abroad still have to file a tax return with the IRS and pay the U.S. Treasury taxes on any income earned anywhere in the world. The only slight relief if you do reside in another country is that you get until June 15 to file your tax forms, but you still were required to pay any due tax by the regular April deadline.

Some folks got political. "I will file them once I'm elected President," said @MoretDarrin. 

And one honest Tweeter confessed a common tendency to put things off.  "I'm a procrastinator," said @LiveDerekChu.

In addition to the social media tax filing admissions, a recent GoBankingRates survey found some Americans are willing to go to extremes if it means not paying taxes:

• 32 percent said they had no problem performing five karaoke songs in front of their company if they could avoid paying taxes,
• 18 percent would go without Wi-Fi for one year,
• 13 percent would gain 20 pounds,
• 11 percent said they would be fine with their web browsing history made public, and
• 5 percent would be willing to smell like a skunk for six months.

Sorry folks, while funny, none of the Twitter posts or survey suggestions will get you off the tax hook.

And if you truly didn't send in a tax return or extension request on Tuesday, you need to take the following 4 steps ASAP.

1. File a return.
Yes, the filing deadline is over. But still get the IRS a return. Now.

Maybe you really are waiting for some tax info necessary to fill out your 1040. Fine. But fill out the return as thoroughly as you can now and amend it later. Once the IRS has your 1040 in hand, the non-filing penalty that started accruing on April 19 stops.

Plus, getting your 1040 into the system will prove to Uncle Sam that you know you have a tax responsibility and you're doing your best to fulfill it.

The fastest way is to file electronically. And if you qualify for Free File — that's having an adjusted gross income of $64,000 or less regardless of your filing status — use it. The IRS/tax software partnership is still open.

2. Pay what you can.
If you didn't file because you can't pay your due tax bill in full, pay as much as you can.

That partial tax payment will not only reduce the amount upon which interest charges are assessed (and, again that process started on April 19), it also will help with the separate non-payment penalty, too.

Again, going electronic helps you settle at least some of your tax bill more quickly. Check out the e-payment options and use the one that works best for your situation.

3. Set up a payment plan.
If your tax bill is really big, consider an IRS payment plan.

You can set up an installment plan directly with the IRS, either by sending the agency Form 9465, Installment Agreement Request, or by using the IRS' Online Payment Agreement Application.

4. File your state returns, too.
Most of the 43 states and District of Columbia that collect income taxes use taxpayers' federal returns as the basis for state filings.

So if you didn't file your federal 1040 this week, then you probably didn't file your state return either.

Each state has its own rules and penalties for late- and non-filers, but they all mean that the longer you put off that tax task, the more you'll owe your state tax collector, too.

Check with your state tax department about the steps you need to take here to reduce those penalties.

Don't owe? Don't worry: If you don't owe the U.S. Treasury any taxes and didn't file your return, don't panic.

Although the IRS still wants your tax paperwork, your non-filing won't cost you. Penalties are assessed based on any tax you owe. And interest charges on $0 tax due is obviously $0. Even I can do that math without a calculator!

But most of us don't calculate and pay our taxes, either via withholding and/or estimated taxes, down to the exact penny every year. If you do, call me and then the Guinness world records people.

That means if you didn't owe any taxes with your return, you're due a refund. What the heck are you waiting for!?!

The IRS isn't going to automatically send you your tax payment overage. You have to ask for by filing a tax return.

Plus, there are other reasons to file a tax return when you don't legally have to do so.

So regardless of whether you owe or are getting a refund, the bottom line is the same. Finish that 1040 and associated forms and get them to the Internal Revenue Service — and state tax offices, too — as quickly as you can.

With taxes, it truly is better late than never.

You also might find these items of interest:

• Tax Tips can help you finish your tax return
• 10 last-minute (or beyond) tax-filing tips
• Automatic extensions for taxpayers in disaster areas & combat zones

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source http://feedproxy.google.com/~r/DontMessWithTaxes/~3/K35povZm5Jc/4-tax-moves-to-make-if-you-missed-tax-filing-deadline.html

Best Accounting Blogs of 2017

I know there are lots of best blog lists. I like them because I always find a few that I wasn't aware of and find of interest. FitSmallBusiness.com just released several "top blog" lists including for small business, retail, e-commerce, real estate and accounting. I'm pleased to be on their list of Best Accounting Blogs.

Here is a link to all of their lists. I also like that they took an extra step of asking the bloggers to showcase a favorite recent post and what their blog is about.

What do you think?

source http://21stcenturytaxation.blogspot.com/2017/04/best-accounting-blogs-of-2017.html

You paid your taxes, now find out how they're spent

Tax Day 2017 is over. That means Uncle Sam has the bulk of his take from our 2016 earnings, thanks to tax bills paid on April 18 with return filings and extensions.

Now what's he going to do with our money?

Steve Ballmer at World Mobile Congress in 2010 talking about the Windows phone when he was still heading Microsoft. (Photo by Aanjhan Ranganathan via Flickr CC)

Steve Ballmer, former Microsoft CEO and current owner of the NBA's Los Angeles Clippers, has the answer to that eternal taxpayer question.

Well, not Ballmer himself, but rather his newly launched government financial database called USAFacts.

The project been in the works for the last three years thanks to the efforts of economists, professors and other professionals that Ballmer assembled. The New York Times' DealB%k column described USAFacts as "perhaps the first nonpartisan effort to create a fully integrated look at revenue and spending across federal, state and local governments."

Visualizing where your tax dollars go: The data, 30 years' worth from more than 70 publicly accessible local, state and federal government agencies, is presented, per New Atlas, "in a number of clean, decipherable formats." Much of that credit goes to the Seattle design studio Artefact.

The government finances section delves into the numbers to help us find the financial details of how much money government makes, owes, as well as spending specifics on employees and services.

Basically, the database was created to help determine just what the government — at all levels — really does with your money.

Facts, not fake news: Even better than its design is the approach to the data presentation. USAFacts offers just the facts without any policy suggestions. "We put the data there in an orchestrated way so people can find it and create their own analysis," says Ballmer.

Plus, since it's not-for-profit, there's no commercial pressure to skew the figures based on dollar signs.

And it's offered as a free public service, according to the site, to fuel informed debates and decisions.

"I don't buy that we're in a post-fact world," Ballmer told GeekWire. "People talk about alternate facts, they talk about fake news … but the numbers are what they are. They tell us about the past. They give us the ability to judge the forecast that we all have for the future."

Governmental performance report: Ballmer, true to his corporate executive background, calls USAFacts "the equivalent of a 10-K for government." A 10-K is a comprehensive summary report of a company's performance that must be submitted annually to the Securities and Exchange Commission.

And it's a ginormous 10-K.

Below is a bit of the breakdown from the more than $5.2 trillion in taxes collected in 2014.

Individual income taxes that year accounted for $1.7 trillion, or 33.27 percent, of total U.S. revenue. Around 80 percent of those taxes were collected at the federal level, with the rest brought in by state and local governments.

This amount (and more) was spent on, in part and per the preamble of the U.S. Constitution:

• Establishing justice and ensure domestic tranquility = $396 billion (7.35 percent of total U.S. spending),
• Providing for the common defense = $813 billion (15.09 percent of total U.S. spending),
• Promoting the general welfare = $1.2 trillion (22.67 percent of total U.S. spending), and
• Securing the "blessing of liberty to ourselves and our posterity" = $2.8 trillion (51.75 percent of total U.S. spending).

Additionally, funding general government operations took $173.3 billion (3.22 percent of total U.S. spending).

Distributing non-grant assistance from the federal government to state/local governments and territories accounted for another $3.8 billion (0.07 percent of total U.S. spending).

You can slice and dice the data yourself. Or you can follow USAFacts' Twitter account to get assorted data tidbits.

Now that you're through with your tax filing, or at least taking a break before finishing up during the six-month extension period, you'll have time to peruse USAFacts. Enjoy!

You also might find these items of interest:

• A detailed taxpayer receipt
• Your tax receipt from the White House
• What's Uncle Sam doing with our tax dollars?

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source http://feedproxy.google.com/~r/DontMessWithTaxes/~3/cqiZWfMA5No/steve-ballmer-government-data-shows-how-governments-spend-tax-money.html

Another example of 20th century tax compliance

Happy Tax Day!  One of the email alerts I received from the IRS today was Tax Tip 2017-48, Helpful Tips to Keep in Mind When Amending  Your Tax Return. I want to focus on tip #1 of the nine provided.  Here it is:

"File using paper form. Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct the tax return. Taxpayers can’t file amended returns electronically. They can obtain the form on IRS.gov/forms at any time. Mail the Form 1040X to the address listed in the form’s instructions."

So, two questions:
1. Why can't the IRS accept e-filed amended returns?
2. Why can't we just log onto our taxpayer account at the IRS and fix the error?

I think this might change once the IRS rolls out its Future State system for taxpayers (and perhaps practitioners too) to use. We'll see.

What do you think?

source http://21stcenturytaxation.blogspot.com/2017/04/another-example-of-20th-century-tax.html

5 tips for folks submitting their tax returns by snail mail

The U.S. Postal Service has evolved since the days when Texas Panhandle residents depended on mule mail. That's a good thing, since millions of taxpayers still insist on using today's postal system to send their annual tax returns to the Internal Revenue Service. (Photo courtesy of Traces of Texas via Facebook)

The 2017 tax filing season has been unusually slow. Through April 7, the Internal Revenue Service reports it had received 3.6 percent fewer tax returns than during the same time period last year.

The decrease in filings extends even to electronic returns, an area that in recent years had been growing.

The almost 95.5 million e-filed returns at last IRS count are 3 million fewer than in early April 2016. That's a 3.3 percent drop that basically accounts for the overall reduction in filing so far in 2017.

Do these numbers mean that more of us are or will be sending in our 1040s by snail mail?

Probably not. The figures more likely mean that millions of us are putting off e-filing until the last minute or getting an extension.

Committed old-fashioned filers: Still, there's a core of taxpayers who insist on using the U.S. Postal Service to submit their annual tax returns.

Even many who use tax preparation software print out their forms and snail mail them, a choice that none other than Internal Revenue Service Commissioner John Koskinen, during his recent appearance at the National Press Club in Washington, D.C., admitted "intrigued" him.

Whatever the reason, many returns will be dropped off at post offices today. If you're one of the dedicated old-school tax filers, here are five tips to make sure that your snail mailed paper tax return makes it to the IRS in good shape and on time to ensure that you don't face late-filing penalties.

1. Make sure your post office is open.
Back in the pre-digital days (yes, youngsters, they existed and many of us survived them!) at least one post office in every town stayed open past its usual closing time on Tax Day. Some of them even had tax return collection parties. No longer.

Check the U.S. Postal Service office locator for the nearest branch and then call it to find out its operating hours today. Make sure you note the time of the last outgoing batch of mail. You want to make sure that your envelope to the IRS bears an April 18 postmark. That's enough for the IRS to count your tax return as submitted on time.

2. Mail your return first class.
Send your IRS-addressed envelope via first-class mail. If you want added assurance, send it certified, return receipt requested.

Also double check the postage you need. If you're sending a lot of forms, schedules and other supporting material to the IRS, it will cost you more than one 49-cent Forever stamp. So don't be cheap.

If your return can't be delivered because of insufficient postage, your return will be late, meaning you'll face late-filing penalties.

3. Send your return to the right IRS office.
Over the last few years, the IRS has reorganized offices to make more efficient use of personnel. That means some service centers now handle returns from different parts of the country than they did previously. Check the IRS.gov page with state-by-state links on where to send your 1040.

4. Put your return address on your envelope.
If there's a problem delivering your return, this is the only way you'll get it back. Sure, your filling will be late, but not as late as it might be if there's no return address and it just sits for months (or forever!) in a dead-letter pile.

5. Be patient.
You might have more tax procrastinating neighbors than you realize. And you all might be in line at the same post office today. If that's the case, take a deep breath and deal with it graciously. At least you're in the final stretch of filing your taxes.

And if your snail mailed return results in a refund, be ready to also wait a while for your tax cash.

The IRS says most folks who e-file and have their refunds directly deposited will see their money within 21 days. Taxpayers who mail paper returns, however, could see those days turn into weeks.

That's one reason Koskinen is intrigued by snail mailers who use tax software. Maybe next year, more of them will hit "send" instead of "print."

An earlier version of this tax tip was posted on April 14, 2015.

You also might find these items of interest:

• 12 often overlooked tax breaks
• Millennials depend on mom and date for tax help
• Free tax prep, e-filing help at VITA & TCE sites nationwide

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source http://feedproxy.google.com/~r/DontMessWithTaxes/~3/MvF3Ha-vhxk/5-tips-for-folks-submitting-their-tax-returns-by-snail-mail.html

Form 4868, the tax procrastinator's best friend

You've got until midnight your time to get your 2016 tax return to the Internal Revenue Service, either by hitting "send" on your computer or getting your paper form to a Post Office where it can be postmarked today.

Or, if it becomes clear that you're just not going to finish that 1040, and the IRS expect around 13 million of us to arrive at that realization sometime today, it's then time to turn to another IRS form: the 4868.

Form 4868, otherwise known as the procrastinating taxpayer's best friend, will get you six more months to complete your tax return.

And not that I'm a nag or anything and I'm sure you already know this by now, but the IRS-granted extension is only to file your forms, not more time to pay anything you owe.

There are several ways to file get your extension, which gives you until Oct. 16 this year. Here's a closer look at each.

Use Free File.
At this IRS.gov site you'll find a dozen tax prep software manufacturers who offer free electronic filing of the extension request. This option to complete and e-file your taxes (or extension) at no cost is available to folks whose adjusted gross income is $64,000 or less.

But there's the Free Fillable Forms if you made more than that. And one of those free fillable forms is 4868. Here you complete the online extension form along with your bank account info for Electronic Funds Withdrawal (EFW) of your money.

Select another electronic tax option.
Don't want to mess with Form 4868 at all? No problem.

You can simply make a full or partial payment of your due federal tax bill by using one of the IRS authorized electronic payment options. They are:

we taxes can now choose among several quick and easy electronic payment options, including the following:

• Direct Pay is a free online tool allows taxpayers to securely pay their taxes directly from checking or savings accounts without any fees or preregistration. Taxpayers can schedule payments up to 30 days in advance. Those using the tool will receive instant confirmation when they submit their payment.
• Credit or debit card tax payments are available online, by phone or with their mobile device through any of the authorized debit and credit card processors. Note, however, that you will pay a fee to the card processor, not the IRS. The IRS has a special Web page with details about and links to IRS-authorized card processors.
• Electronic Federal Tax Payment System, or EFTPS, is a free payment portal. I'm including this option, which I've used for years for tax filing and payments, but technically it's too late to use EFTPS. You must be enrolled beforehand for EFTPS payments, but check it out for future filings, say making the upcoming June, September and next January estimated tax payments.

When you use one of these e-payment options today, you don't have to mess with filing Form 4868. Your payment is indication enough to the IRS that you'll get around to sending it your return forms by the October due date.

Still time to file: Now I'm not telling you to give up already on finishing your tax return. There's still plenty of time left in April 18 to finish your forms. These 10 last-minute tax filing tips can help. So can the more than 70 Daily Tax Tips.

But I am saying that if you do decide it's not worth the frantic tax effort today, you have options. Choose one of them and then come back to your tax filing when you're in a less stressed state of mind.

The IRS and you will be happy that you tackle the forms when you're really ready to do so — as long as you've gotten the official extension!

You also might find these items of interest:

• How to e-file, and if necessary, e-pay your taxes
• Last-minute IRA contributions could mean a tax win-win-win
• Automatic tax filing & payment extensions for taxpayers in major disaster areas & combat zones

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source http://feedproxy.google.com/~r/DontMessWithTaxes/~3/suyRnYzXjHk/form-4868-the-tax-procrastinators-best-friend.html