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Do you Normally Owe?

Let’s Face It…

Taxes aren't anyone's favorite topic. Well the Crazy Tax Lady is on a mission to change how you feel about doing your taxes. Tune in weekly as we unravel the intricacies of the tax code, breaking down complex concepts into bite-sized, easy-to-understand pieces. Each week, we'll delve into different tax topics, offering practical tips, expert insights, and real-world examples to make your tax journey not just tolerable but surprisingly enlightening. Crazy Tax Lady offers an E guide to get you feeling confident about your next income tax appointment. Click the link below to learn more. Join our community of tax-savvy individuals who have turned tax season from a source of stress into just another day of the year!

Do you Normally Owe every year?

Do you Wait to file your tax return until the "last minute" because you don't want to pay the IRS any sooner than the last day? Here's the thing... You can file on the first day of tax season, you don't actually owe the money until the last day!

I realize that this is a novel concept and not widely known. However that doesn't make it any less true. Here's the problem with filing on the last day, or even in the last month, you don't know what you are going to owe. So you either hold money in reserve for a debt you're not sure the amount of ( and that's if you are actually one of those rare people who are prepared for the debt!) Or, you are hit with a bill (possibly higher than you imagined it would be!) and you are now are unprepared to pay it. If you don't cover the debt by midnight on the last filing day you are going to incur fees and penalties. Even if you have the money somewhere, (a retirement account or in your home equity for instance) you are going to need more than one day tk access it.

The Answer is to file at the beginning of the tax season! You will then have a couple of months to prepare for the debt. You will have time to save and prepare to pay for it. The other reason to file at the beginning of tax season is to determine what changes you can make to not repeat this process the following years. If you wait until April to file you are 4 months into the new year and just realizing that your withholdings are inadequate. If you plan to make a change it will have to be a bigger change to make up those months. (Think of how many pay periods you have per month. If you are at month 4 you are now possibly 16 pay periods short!) If you filed at the beginning of the tax season you would only be 1-2 months into the year and those changes could be a little smaller and therefore easier to adjust for. (Think 4-8 pay periods into the year)

So this year start to look at your tax appointment a little differently. The IRS doesn't care if you are not filing until the last day. You are not hurting their feelings. You are however making your own life more difficult as well as that of your preparer. The big secret to taxes is knowledge. You cannot really change the outcome. You can only change your response to the inevitable.

A Quick Guide to Tax Season

These are important dates to remember. 

For Individuals;  (just a quick fyi: this means family too, individual is as opposed to a business return) April 15 of every year is considered the Last filing date. Generally you can think of February 1 of every year as the First filing date. These dates aren’t set in stone anymore. We have added holidays, and if there is a pandemic, (who would’ve thought, huh?) and now that the IRS (Internal Revenue Service) does almost all tax return filings electronically, the start date is when they are ready for that influx of electronic information. So the beginning and ending dates may change. That’s why it’s a good rule of thumb to use February 1 as the start and always April 15 as the final day to file your individual tax return. 

Individual Extensions have to be filed by April 15. 

October 15 is the last day to file your individual tax return if you filed an extension. 

An extension is an extension to file not to pay! This means you should only file an extension if you know you get a refund. You can file an extension if you know that you will owe but you have to make a good faith payment with the extension in the amount you think you will owe. 

Here is a tip;  if you know you owe every year you should file your taxes on the first day so you have time to gather the money. 

For Corporations (this is not a side business, this is a separate entity that has filed titles of incorporation) the first Filing Date is going to be the same as an individual return, however the last Filing Date is March 15 and the last day to file a corporate return with an extension is September 15. 

These dates won’t apply to most individuals. Just knowing these dates and having them set in stone in your mind will relieve some of the stress with taxes. These dates were common knowledge, but somehow they have become unknown in our younger developing society. Let’s take control and get to know our own tax returns so we can make the best decisions for ourselves and our families.

© This Week in the Tax Office

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