It’s the final full week of tax season, and our office in Virginia Beach is hopping!
But yes, I’m still taking the the time to step away for a moment and write to you, my friend. Lots of business to communicate today, with the deadline of Tuesday, April 17th, right around the corner.
And, fret not — if you have all your papers in, and are waiting for our completion, know that my team is hard at work, even as I put this together.
This is often our busiest week of the year (so please be understanding), but it’s also the week when we receive, with clockwork regularity, many questions from Virginia Beach taxpayers about extensions.
But before I get to those, here are a few more things that fall on the 17th…
1) Estimated taxes for the first quarter are due.
2) Want to open or contribute to an IRA or Roth IRA for 2017? Gotta get that done by Tuesday the 17th.
3) Final day to max out contributions for your 2017 HSA (Health Savings Account).
4) Claim any refund money from an unfiled 2014 return. (There is over $1BN of unclaimed refund money out there for that year — but only available if you didn’t file a return for that year.)
5) Most states’ tax deadlines also fall on the 17th. (Exceptions – DE 4/30; HI 4/20; IA 5/1; LA 5/15; VA 5/1; any state with no income tax.)
(Oh, and if you HAVE finished your process with us, please let us know what you thought. We really appreciate it. You can also find us on Yelp and/or Google Maps.)
Now … about those tax extensions.
B H James’s Tax Extension Breakdown
“Here is a test to find whether your mission on earth is finished: If you’re alive, it isn’t.” -Richard Bach
As you know, this upcoming Tuesday, April 17, 2018, is the filing deadline for a federal tax return. 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 17th. This gives you an automatic six-month extension of time to file (until October 15, 2018 — note, this is NOT the 17th of October).
Here’s the skinny:
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. And, you’ll have to pay what you estimate you owe at the time we file for the tax extension.
And we can easily help you create this estimate.
You can do this all electronically through our office, you can mail in the form WITH estimated payment (must be postmarked by the 17th), 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, especially because the interest rates from the IRS are usually better than what you can get here.
However, if you’ve exhausted the options above, I suggest you do this instead:
7) Sell something you don’t need anymore. Always a pretty good plan anyway.
B H James
James Financial Services Inc