Extended deadline, October 15 fast approaching - get the documents to your tax professional now

For those of you who filed extensions on your personal income tax returns, the deadline for filing is fast approaching. Remember that filing an extension prevents the Internal Revenue Service (IRS) from imposing late filing penalties of up to 25% of any outstanding tax, provided that the return is filed by October 15, but does not prevent the IRS from imposing late payment penalties equal to 0.5% of the outstanding balance per month or part, beginning April 15, as well as late payment interest. If your return is not filed by October 15, assuming you filed an extension, an additional penalty equal to 25% of the outstanding tax can also be imposed.

It is crucial to have all your tax documents to your tax professional as soon as possible. Do not expect your tax professional will be able to timely file your return if you send him your materials on October 14 or 15. If you are expecting a refund, however, there is no penalty or interest. If you do not think you can have your materials to your tax professional in time for the October 15 deadline, then the best thing to do is to estimate your federal tax liability for the prior year as best you can on your own and make a larger than necessary payment to ensure you are overpaid and the late filing penalty cannot be imposed (late payment penalties and interest may still be imposed, however). Any overpayment can be refunded or applied to your next year’s tax.

Please note that after October 15, the IRS announces a date when it will temporarily close its system for electronic filing of returns, typically sometime in November. At that point you will either need to have your return for the prior year mailed, or wait until sometime in the following January or February to file the prior year’s return, when the IRS re-opens the system for electronic filing.

Help your tax professional help you - get your tax documents over to them as far ahead of the tax filing deadline as you possibly can, and be prepared to immediately answer any questions they may have about your situation for the prior year that your documents don’t necessarily reveal. This will ensure timely filing of your returns and help prevent or minimize any penalties or interest imposed on any unpaid taxes.