Posts Tagged ‘tax return’

When Should You File Your Tax Return?

January 7, 2014

IRS ReturnThe IRS announced that it would begin accepting individual tax returns (Forms 1040 and 1041) on January 31, 2014.  Business returns (Forms 1120, 1120S and 1065 ) will start being accepted on Jan 13, 2014.  Unincorporated businesses that report their income on Form 1040 Schedule C, Schedule E or Schedule F are not included as business returns so the January 31 date applies.

When is the best time to file your tax return?  There is a simple answer.  That depends.

Many people want to file their returns early to get their refund back as soon as possible.  That is one consideration.  If you have a simple return and really need the money this is probably a good strategy for you.  And yet there are other considerations.

The earlier you file your return, the more months the IRS has to decide if there is something that needs further explanation.  More months of exposure to IRS examination.

And the later you file, the more returns are already in the audit pipeline when yours arrives.  This may reduce your audit exposure (but no guarantees).  Many of our clients pay their tax when they file their extension on April 15 but wait until October 15 to file the actual return for this very reason.

Look at all your personal factors and then decide what is best for you.  If you have a question, contact a tax professional.

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It’s Show Time!!!

September 28, 2013

October 15If you filed an extension on April 15 to put off the filing of your 2012 Form 1040, just a little reminder.  The clock is ticking down to get your records together and prepare your tax return.  If you use a tax professional, do them a favor – don’t put it off until October 14.

But getting your tax records to your tax professional sooner rather than later is a great advantage for you.  This gives some time to actually go over the return and see if there is anything that can be done to reduce your tax bill or increase your refund.  The longer you put it off, the less time there is for strategy.

Actually you should be planning NOW for your 2013 tax return.  MyTaxBuddy.com has a subscriber that used our service to input all her 2012 tax records at one time.  She told us that it felt so good to have 2012 done that she decided to input all her 2013 records and is now staying current.  And she is enjoying the peace of mind in NOT having to think about being stressed out next year. We love happy subscribers.

If you dread the time when you have to battle your avalanche of receipts , do yourself a favor and start getting your tax records together now.  You can let go of the year-long dread that you carry around and, once you file your return, have the comfort of knowing that, when the IRS does call, your records are ready.    Wouldn’t that be a welcome change?

Big Numbers Attract Attention

September 6, 2013

Rising incomeAccording to the IRS, there were approximately 23.4 million individual income tax returns that reported nonfarm sole proprietorship activity, a 1.8-percent increase from 2010. Profits reported on these returns rose to $282.6 billion in 2011, a 5.6-percent increase over 2010.

These numbers sound impressive until you break them down to the individual level.  If we divided the total amount of the profits by the total number of returns, we find that the average business Schedule C shows a profit of less than 12,000 and the average weekly increase in profits was $12.30.   Some businesses were more.  Some less.

Big numbers can draw attention.  Small ones are easy to ignore.  Think about this when you look at your business tax schedule.   What kinds of expenses are drawing the attention of the IRS for audit?  Are they the kind of expenses that could possibly be personal and disallowed on audit?  Hmmmm.

When preparing your taxes, go to the other side of the desk and ask yourself, “If I were an IRS Agent (perish the thought), what things on this return would I look at to audit?”   I’m not saying you should not take the deductions that you are entitled to take.  Far from it.  Judge Learned Hand once wrote “Any one may so arrange his affairs that his taxes shall be as low as possible;”  Good advice.

However, the Roman poet Horace reminds us that “he who is greedy is always in want”.


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