Continuing our effort to provide you with valuable tax information, we will periodically update this page with useful tips and information on issues that you commonly deal with. Prepare Now for Next Year's Tax Season

Mercifully (or unmercifully), this year's April 17 tax deadline has come and gone. Unfortunately, the same cannot be said for our continuing obligations as taxpayers. With another tax filing season less than a year away and while your psychological scars are still fresh, please consider these lingering tax-related issues.

For many taxpayers (and hopefully you know who you are), the 2006 filing season was extended beyond the April 17 filing deadline for various reasons. For example, the IRS allowed victims of the major storm affecting several Northeastern states to file their returns by April 26 without incurring late-filing and payment penalties. In addition, the IRS extended the deadline for filing returns to midnight April 19 for taxpayers and tax professionals who were unable to file their returns due to the Intuit server problem that arose in the evening of April 17. Those affected included users of Turbo Tax, ProSeries, Lacerte and Turbo Tax Freedom.

Also, if you're a calendar year taxpayer that filed IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, for an automatic six-month filing extension, you have until October 15, 2007, to get your act together and file your required tax forms.

Similarly, you can't put your 2006 tax year entirely behind you if you reported something incorrectly and need to file an amended return (IRS Form 1040X). Although the IRS usually corrects math errors or requests missing forms, you should file a Form 1040X if there was a mistake involving your filing status, total income, or claimed deductions or credits. To avoid losing out on any refund related to amending your tax return, Form 1040X must be filed within three years from the date you filed your original return or within two years from the date you paid the tax, whichever is later.

Aside from wrapping up the 2006 tax season, there is also the 2007 tax year to consider. Rather than trying to repress your painful memories, try to learn from this year's tax season. With only a little extra investment of your time, you can use your experiences to help guide you through the rest of the tax year and into next tax season.

Tax filing insights can come in various forms, but just about all of them can be grouped into two categories: those dealing with the mechanics of your filing method and those that should be tied to your overall tax planning for the year.

The mechanics of tax filing include things like your ability to easily find the records and files you need, your method of preparing your taxes (e.g., software, professional tax preparer, etc.), and anything else necessary to complete and mail your tax return on time. When considering this category, evaluate what worked and what didn't during the last time around. Then, a la Scrooge, commit to mending your evil ways and make any necessary changes in the coming year.

As far as tax planning goes, knowing where you've been can help get you to where you want to go, especially if you're self-employed. In other words, seeing how you came out on your last tax return can help alert you to changes that need to be made to minimize your tax burden next time.

For example, if you underpaid your estimated taxes and paid a penalty or overpaid your taxes and got a huge refund (after giving Uncle Sam free use of your money), you should adjust your tax payments throughout this year accordingly. You might also want to explore the different deductions and credits available to lower your overall tax bill, like investing in a retirement plan or making purchases for your business.

If you had a more difficult tax season than usual, remember to plan now to prevent history from repeating itself next year. For now, though, you may resume your post-tax filing celebration.

Tax Guide 2009

Penalties for Underpayment or Late Returns
What happens if you don't file a tax return or pay taxes that you owe by their due date? Generally, in this situation the IRS will send you a notice hitting you with interest and penalties.   For more details, please review Penalties for Underpayment or Late Returns.

What To Expect if You Are Audited
Hopefully, this will not be an issue for you, but you should have some awareness of the IRS audit procedures. The IRS has several different levels of audits. If questions arise about your math, items seem to be omitted from your return, or your figures don't match those on your W-2s, 1099s, or 1098s, the IRS may simply request a correction or explanation by mail.   To explore this topic further, take a look at  What To Expect if You Are Audited.

Keeping Good Records
Preparing to meet your annual tax obligations is a year-round process. For example, everyone who pays taxes is required to keep accurate, permanent books and records so they can determine the various types of income, expenses, gains, losses, and other items that affect their income tax liability for the year.   To help get you on the road to better tax organization, please read Keeping Good Records.

Tax News

Charitable IRA Distributions

Tax season is not typically associated with charitable giving. We may be giving, but it's the time of year where most of us are trying to hold on to as much of our money as we can. However, if your taxable income includes a mandatory distribution from a retirement plan and you're in the enviable position of finding that you don't need the income, a charitable donation under a special provision may help you avoid a bigger tax bill.   For more on this story, please review Giving Through IRA Distributions Benefits Taxpayers, Charities.

Underpayment of Taxes Addressed

The IRS is working on ways to address the underpayment of taxes known as the tax gap: the difference between what taxpayers owe and the actual amount they pay. This difference is caused by a number of factors, some nefarious and intentional, others not so much.   To learn more about this development, please read IRS Continues Work on Reducing Tax Gap.

Tax-Filing Tips Available

Although the April 17 tax filing deadline is past, there are still many taxpayers who have not yet filed a tax return. For those who still need them, some handy tax tips are available to get you through your extended filing season.   To learn more about these tips, please read Last-Minute Tax Filing Tips.


Tax News Archive

For more news stories and features on federal, state and payroll tax issues and how they may affect you, read the listing of articles in the archive.