Yep. This is the final week, and the personal filing deadline (April 15th) is *so* close.
It’s officially the final week of tax season — and we are working our tails off for you and our other New York/New Jersey Metro clients.
But I’m still taking the time to step away for a moment and write to you, my friend. And if you have all your papers in, and are waiting for our completion — fear not — my team is hard at work, as I type…
Oh, and if for some reason you haven’t done ANYTHING with your taxes yet, it’s actually not too late. More about that in a moment.
But first, there’s a lot of “business” in this note, so please make sure you read it all — it could make a huge difference. (Honestly, I much prefer writing the notes that are a little more “interesting”, but this is really crucial information.)
And you know what else would make a huge difference? If we heard from you. Would you leave us a review on Google or other online platforms for potential clients to see? We have found that these sources can be so helpful for people evaluating their options, and would love to have as much information there as possible. Thank you!
But yes — this is often our busiest week of the year (so please be understanding), and it’s also the week when we receive, with clockwork regularity, many questions about extensions and payment options.
But before I get to that: other deadlines that fall on April 15th this year:
1) Estimated taxes for the first quarter are due.
2) Want to open or contribute to an IRA or Roth IRA for 2018? Gotta get that done by Monday the 15th.
3) Final day to max out contributions for your 2018 HSA (Health Savings Account).
4) Claim any refund money from an unfiled 2015 return. (There is $1.4 BILLION in unclaimed refund money out there for that year — but only available if you didn’t file.)
5) Most states’ tax deadlines also fall on the 15th. (Exceptions – DE 4/30; HI 4/22; IA 4/30; LA 5/15; ME 4/17; MA 4/17; OK 4/20; SC 5/1; VA 5/1; any state with no income tax.)
Alright — let’s dive into my thoughts on extensions and payment options (if you aren’t able to pay your tax bill right away)…
2018 Tax Extensions and Payment Options for New York/New Jersey Metro Taxpayers
“If you spend too much time thinking about a thing, you’ll never get it done.” – Bruce Lee
As you know, this upcoming Monday, April 15th is the filing deadline for a federal tax return (except for you Maine and Massachusetts people — you get until the 17th). If you need more time to get your paperwork complete, you need to file (or have us file on your behalf) this form: http://www.irs.gov/pub/irs-pdf/f4868.pdf with the IRS by the end of the day on the 15th (the 17th for ME and MA residents). This gives you an automatic six-month (until October 15, 2019) extension of time to file.
Here’s the deal: An “Extension of Time to File” is not an “Extension of Time to Pay”, unfortunately. The extension simply gives you an automatic six months of additional time to get your paperwork together and file that return. But, if you owe more than what you paid with your estimate, you’ll be accumulating penalties and interest on the difference — so PLEASE don’t take the entire six months to do this!
So, when filing your “Extension of Time to File”, you’ll need to estimate what you think you owe to the IRS. This should not be pulling numbers out of thin air (or other various body parts). You’ll still need to go through your receipts and tax documents and get them “somewhat” organized.
From here, you can estimate both your income and your expenses, and then approximate what you owe Uncle Sam. Keep in mind that this is an ESTIMATE. Then you’ll have to pay what you estimate you owe at the time we file for the extension.
You can do this all electronically through our office, you can mail in the form WITH estimated payment (must be postmarked by the 15th), or you can call a specialized provider and pay by credit card. We can provide you with the appropriate number to call.
If you cannot pay your taxes due for some reason:
1) Pay as much as you possibly can right now.
2) You can ask for (and often receive) an extension of up to 120 days to PAY: https://www.irs.gov/taxtopics/tc202.html. It requires a phone call to the IRS. 🙁
3) “Financial hardship” delay: This is if paying your tax bill would demonstrably affect your ability to pay your other bills. Interest and penalties still accrue, but it’s better to register this with the IRS than to simply ignore the bill.
4) Installment payment plan: If you owe less than $50K in taxes, you should usually be able to get an installment payment plan of up to 72 months, simply by asking for it. If this is something you are considering, please let’s talk it over to make sure we come up with the best plan. But you can apply online for this here: https://www.irs.gov/Individuals/Online-Payment-Agreement-Application
5) Negotiate: This is NOT something to try on your own. We can help, but the number of “Offers in Compromise” that get accepted each year are quite small and a knowledge of how the system works is important.
6) Using existing credit sources (credit card, HELOC, private loans): Some tax advisors would quickly recommend this, but I would NOT recommend you go this route. If you’ve exhausted the options above, do this instead…
7) Sell something you don’t need anymore. Always a pretty good plan anyway.
That was a lot of information. I truly hope it is helpful.
But regardless, we’re in your corner.
Lillian’s Professional Services LLC