While many have already filed their federal income tax returns for 2012, more than 10 million taxpayers are expected to file a return on extension in October. There are legitimate reasons why taxpayers need time beyond April 15 to file. One of the most common reasons is a situation where income does not come from the usual suspects like forms W-2 and 1099-INT. Self-employment income, interests in entities like partnerships, limited liability companies and s corporations, last minute retirement account contributions, and receipt of distributions from a trust or estate all make filing complicated and generally delayed. Fortunately, filing for extension gives you a six-month extension of the original time to file. For 2013, the key date is October 15: taxpayers who timely requested an extension have until that day to file their federal income tax return without a late filing penalty.
Here are some helpful hints and useful information to help you finish your tax return without any last minute panic:
First and foremost, organize your documents and records in case you need time to locate any missing information. While the IRS will let you know if you missed any income, there will no notification if you missed a deduction or credit. Consider creating different folders containing related documents:
• Income items–W2, K-1s, 1099s, Gaming winnings, and other items of income
• Deductions–Schedule A items, mortgage interest, donations, taxes paid
• Capital Items–Documents related to stock sales and the like – 1099s, broker statements
• Credits & Other–Education credits, adoption credit, Energy credit and related support
• Prior-Year Tax returns–Prior 3 years of tax returns makes for a great place to start
Secondly, review your prior-year tax returns and review any life changes you had during the year. As noted above, your prior-year tax return is a good place to start when determining what your sources of income and expenses were in the previous year. Getting married or divorced, having a child, sending a child to college, becoming a caretaker for an older family member, or even retiring can have a profound effect on your tax return. Many changes have additional expenses, or even credits, to help reduce your taxes and increase any potential refund.
If you are unsure of your credits and deductions, have questions, or just want to remove some of the additional stress in your life, it’s best to seek the help of a tax professional.
JDKatz, P.C. is a full-service law firm focused on tax law, business and transactional law, estate planning and elder law. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys, or visit http://www.jdkatz.com.