With Summer here, most people are thinking of vacations, staycations, relaxation and… procrastination when it comes to filing taxes. However, the latter can lead to big headaches when suddenly September and October arrive with the realization that the time to gather and submit tax data is now.
September 15: Filing deadline for Partnership and S Corporation returns on extension
September 30: Filing deadline for Fiduciary returns on extension
October 17: Filing deadline for Individuals and C Corporation (Dec 31 year-end) returns on extension
1. Develop a simple organization system for collecting tax data as it is received throughout the year. If hard copy storage is more appealing, immediately open mail containing tax documents and place in a file or other folder. For documents delivered electronically, print, and save upon receipt into the designated folder. If electronic copies are easier to manage, save documents delivered electronically into a designated folder on a computer and immediately scan and save any documents delivered via snail mail into that same folder. It is wise to clearly and appropriately label all tax data files received to avoid having to open each file individually later.
2. Be proactive in obtaining the tax documents needed. Schedule K-1s and Information Returns are sometimes delayed in reaching recipients. Reach out to the responsible parties to inquire about their estimated delivery dates and follow up if the documents are not received within a reasonable timeframe.
3. Get an edge during the slow season. Take advantage of the slow time of year for tax professionals and get ahead of other clients who wait until the last minute can provide many benefits. The summer months offer great opportunities for even more personalized attention and the ability to schedule convenient tax planning appointments to discuss tax-saving strategies. It is also helpful to let tax professionals know when to expect tax preparation data so they can plan accordingly. Generally, tax data submission done thirty days prior to a filing deadline is sufficient. It is common practice among tax professionals to tack on a surcharge for any data received less than thirty days prior to a filing deadline.
Why File Now
The IRS has struggled in recent years to timely process tax returns and refunds. Processing bottlenecks will happen as each filing deadline approaches, which tend to delay taxpayer refunds significantly. Even the IRS is encouraging taxpayers to file early as opposed to waiting until October to file.
Taxpayers who prepare in advance are in a better position to avoid making mistakes and, as a result, file accurate tax returns. This also prevents penalties and interest due to incorrectly reported or missing tax data because of haste and/or lack of planning. Start preparing now for the successful filing of extended 2021 tax returns!
Author, William Vandegrift, EA
Tax Manager, Spiegel Accountancy
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.