Tax Day is Around the Corner; Are You Prepared?

Happy Tax Day! Come Monday April 15, 2013, your tax returns are due. Have you prepared? While many people filed their tax returns well before the April 15 deadline because they gave the government an interest free loan and are due a refund; many other people delay filing their tax return or never file a tax return. These people dread Tax Day because they know that they’re going to owe a tax debt once they actually do file their tax return. So they believe it’s better to not even file. This is not the correct approach.

If you are in the group of people who procrastinate filing their return or do not file your tax returns in fear of a tax debt, given the present Internal Revenue Service (IRS) collection regulations, this needs to be the year you fix your tax problem. If you have a filing requirement, you need to either file a tax return or an extension to file by April 15. Simply ignoring your filing requirement will likely cost you more money in the long-run as failure to file monetary penalties are severe.

Eventually, the IRS is likely to catch up with your shenanigans. If you had sufficient income requiring you to file a tax return, such income was likely reported to the IRS. Once your income is reported, even if you don’t file a tax return, the IRS may eventually file a return on your behalf by using the reported income and minimum deductions to assess a liability against you.  Even if your income isn’t reported, taxing entities have been known to use other means to estimate your income to assess a liability against you.

You’re legally allowed to file an extension to file, so use it if you’re not ready to file your tax return. This is a simple procedure. Many taxpayers fail to file a timely tax return. Or, alternatively, they elect to pay undue taxes by claiming the standard deduction simply for the purpose of meeting the tax day deadline because they don’t think they have the time to itemize and calculate the deductions and credits they are entitled to claim. While an extension to file is not an extension to pay, filing an extension and properly preparing your tax return will likely save you money.  You must file your extension by April 15. If needed, filing an extension will generally allow you until October 15, 2013, to properly prepare your tax return.

So you filed your tax return or you are about to file your tax return, and you owe a non-disputed tax debt… what do you do now? Can you pay the debt? If you can afford to pay the debt owed, paying the debt is usually the least costly option after penalties and interest are factored into the equation. But if you’re like most people who end up owing a tax debt, you likely were not expecting to owe a tax debt and it’s simply another debt you cannot afford to pay.

If this is the case, there is one thing to keep in mind: the IRS is not your friend when you owe a tax debt, they are like any other creditor, they need as much money from you as they can get, as quickly as they can get it. Even with the public relations blitz over the past couple years of a kinder, gentler IRS, keep this in mind as your financial situation needs to control the final resolution of the tax debt. Too often I hear from people owing tax debts who agreed to some outrageous payment plan because the IRS required such payment based on their liability owed and disregarded their actual financial situation.

Therefore, it’s important to know your financial limitations. If you truly cannot pay your tax debt, there are options available to you. However, you need to have an organized and systemic presentation of your circumstances to get the appropriate resolution to your tax headache. While the IRS will likely pressure you to pay your debt in full within 90 – 120 days or make payments including penalties and interest over the next five to six years, there are other options available which include petitioning for non-payment of the debt, to settling the debt for less than the amount owed. The point is that there are options available to you and the key is to file your return, and then address the debt within your financial limits, do not ignore it. And, if you need professional assistance, call the tax relief attorneys at Montgomery & Wetenkamp toll free at (800) 454-7043 for your free consultation. We can help you resolve your tax debt.

Axl Rose on Punctuality

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Guns N’ Roses was notorious for starting their shows late.  I always believed it was a standard side effect of the rock n’ roll lifestyle; the drugs, the revelry, the general irresponsibility.  But Axl Rose, GNR frontman, recently addressed the issue of punctuality in a rare television interview with Jimmy Kimmel.  Ironically, his explanation came a couple decades too late.

In his first live TV appearance in 20 years, Axl Rose talked about some of his puzzling behavior, such as his ridiculous corn rows, his disappearing back stage in the middle of shows, and his chronic tardiness that had a tendency of alienating fans.  Axl apparently lives by the mantra “punctuality is the thief of time” (a famous Oscar Wilde quote from the book The Picture of Dorian Gray).  In other words, if he showed up on time, then chances are he would just have to wait, thereby wasting his own time.  And why should a rock star have to wait for anybody?!

My sincere hope is you will not follow Axl Rose’s example when it comes to your taxes.  It’s only October, but it’s not too early to start thinking about next filing season.  Get your paperwork in order now so you’re not scrambling in April.  If you’re going to need an accountant or tax attorney, save yourself some trouble and begin making plans now; it could mean the difference between tax relief and tax disaster.

Stress About your Bracket, Not your Taxes

We’re approximately one month away from Tax Day and the IRS is offering up a bit of advice on how to get through these next few weeks without losing too much sleep. The most prominent ingredient in IRS’ anti-stress formula is “Don’t Procrastinate.” This is good advice. Why wait until the weekend of April 15th to get started on your taxes? If you rush around at the last minute to get your taxes done, then the likelihood that you will make an error increases. Also, don’t think you can pop in to see an accountant or a busy tax preparer at the 11th hour. There are many people who put it off and you’re going to have to “take a number” and wait your turn.

If you’re due a refund then you probably file early. Most of the last-minute filers are people who know they are going to owe. Some of them know they will owe and also know they can’t afford to pay — and that can certainly be a big source of stress. But it doesn’t have to be…

Self-serving plug: The tax attorneys at Montgomery & Wetenkamp know how to resolve tax debts quickly and fairly. Call now for your free consultation.