If you are one of the millions of procrastinating taxpayers who waited until the last minute to file your taxes, it might make sense to ask for an extension.
“Rather than rush, miss deductions and chance mistakes, I often recommend that my client files for an automatic extension,” said Jeff Lawson, CPA, of the Towson firm of Stoy, Malone and Co.
When you ask for an extension, the Internal Revenue Service automatically gives you an additional six months to file; however, if you owe Uncle Sam any taxes, you must include a check with your extension to avoid be penalized, said Towson accountant Eugene D. Nazelrod, CPA.
“If you don?t pay, the IRS will charge you a late penalty, plus 10 percent interest on the money you owe,” Nazelrod said.
He said the number of taxpayers who wait until the last minute to file varies from year to year.
“It?s the same,” he said. “Many people are just typical procrastinators.”
But there is no penalty for failure to file if you are due a refund, according to the IRS.
A new survey by Yahoo! Finance found that 40 percent of taxpayers are waiting until the final week to file their returns. One in 10, or 9 percent, said they plan to file for an extension.
The survey also discovered that 38 percent of taxpayers who have already filed said they had been dishonest on their returns, while 9 percent admit to cheating.
Even so, the number of audits has not varied, Nazelrod said. “It?s minimal.”
For tax procrastinators who decide not to ask for an extension and instead file at the last minute, the IRS has the following suggestions:
» When filing your return, remember to make sure your tax payment check or money order is payable to the United States Treasury.
» Whether you are filing your current year?s return, a prior year?s return or an amended return, always provide your correct name, address, Social Security number, daytime telephone number, tax year and form number on the front of your check or money order.
» Enclose your payment with your return, but do not staple it to the form. Do not mail cash with your tax return.
Common tax schemes
» Trust misuse: Unscrupulous promoters for years have urged taxpayers to transfer assets into trusts. They promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes.
» Return preparer fraud: Dishonest return preparers can cause many headaches for taxpayers who fall victim to their ploys. Such preparers derive financial gain by skimming a portion of their clients? refunds and charging inflated fees for return preparation services.
» Credit counseling agencies:Taxpayers should be careful with credit counseling organizations that claim they can fix credit ratings, push debt payment agreements, or charge high fees, monthly service charges or mandatory “contributions” that may add to debt. ? Source: IRS
