If you haven't finished your taxes, it's time to get moving!
Chris Harper, an Instructor at Grand Valley State University and senior manager with Hungerford Nichols joined My West Michigan with some last minute tax tips.
Don't panic, but don't procrastinate any longer
- April 18 is the deadline to file 2016 federal and Michigan tax returns.
- Make sure you have gathered all tax-related documents so you are able to file a complete return.
- Look at your 2015 tax returns as a guide for gathering information for your 2016 returns.
- Consider requesting an extension of time to file if you cannot obtain everything you need. However, remember that an extension of time to file a return is not an extension of time to pay taxes.
File your return even if you cannot pay
- There is an onerous failure-to-file penalty in addition to a failure-to-pay penalty. Failure to file a return could increase your liability by 25% or more.
- Even if you cannot pay the full amount due, you should file the actual return or request an extension by April 18.
- Pay as much of your 2016 tax liability as possible by April 18.
- The IRS frequently grants installment agreements if the taxpayer makes the appropriate request.
- Paying via credit card is an option. However, there is a transaction processing cost associated with this option.
Report all taxable income
- The IRS receives the information from Forms W-2, 1099, 1098, etc. and uses computers to match this information with the amounts filed on tax returns.
- If information from W-2s, 1099s and other documents is not reported on the proper form and according to the correct method, the IRS will easily identify discrepancies and will issue a notice to the taxpayer.
- If you receive a W-2, 1099 or other form that is inaccurate, you should contact the issuer to request that they submit a corrected form to the IRS.
Don't be afraid to extend your return
- The IRS will automatically extend your tax return due date to October 16 if you file Form 4868 by April 18.
- A valid extension allows self-employed taxpayers to deduct certain retirement plan contributions on their 2016 tax return if the contribution is made by the extended filing date.
- It is better to extend than to file an incomplete return.
- Rushing to submit a return that you have not thoroughly reviewed is also a bad idea.
- An extension may be the only valid option if you do not yet have all the information you need to prepare your return.
- It is also possible that your professional preparer may not have time to completely prepare your tax returns by the deadline if you have not yet given them your information.
- Don’t forget about state or city filing requirements.
For more information, visit www.irs.gov and/or consult a professional tax preparer.
Courtesy: Chris Harper, www.hungerfordnichols.com