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27 March 2018

What You Need to Know This Tax Season

What You Need to Know This Tax Season

We’re in the thick of the 2017 income tax filing season. It’s the time of year we’re often inundated with questions and, with so much confusion about the current tax code, this year is certainly no exception. We’ve answered some of the most common income tax filing questions for the 2017 tax year below.

With April 15 falling on a weekend again this year, when are taxes due?

You have a couple of extra days to file income taxes in 2018 since April 15 falls on a Sunday and Monday, April 16, is Emancipation Day, which is a legal holiday in the District of Columbia. That pushes the filing deadline to submit returns to Tuesday, April 17, 2018.

What exactly is due on April 17?

It’s important to file either your completed income tax return or an extension by April 17, 2018, to avoid a steep failure-to-file penalty of 5 percent PER MONTH of your unpaid taxes. A separate failure-to-pay penalty will also kick in if you don’t pay at least 90 percent of what is due by April 17, 2018, even if you file an extension (which gives you until October 15, 2018, to file). The failure-to-pay penalty isn’t huge (½ of 1 percent of your unpaid taxes PER MONTH), but it can still add up. 

Is there any reason to file an extension other than not being ready with the paperwork?

Yes! You may choose to file an extension so that you have more time to make certain decisions. If you’re self-employed, for instance, you might want to take that time to fund a SEP-IRA, solo 401k, or SIMPLE-IRA. The extra time can also be used to recharacterize IRA contributions that were already made in 2017. Business owners can also use the time to make decisions about Section 179 deductions when it comes to the depreciation of equipment and whether to carry back or carry forward business losses

What about all the changes to the tax code?

Most of the recent tax code changes apply to your 2018 taxes moving forward. So, while your paycheck may already reflect a smaller income l tax deduction, your 2017 tax return—including the amount you pay or the amount you receive as a refund—will not change much from recent years unless your income or other financial factors have changed.

How can I get a fast refund?

There’s no magic wand to wave that can ensure a quick refund. Of course, the earlier you submit your taxes by the tax deadline, the better. The IRS states that using e-file and direct deposit helps, too. To find out when you’ll get your refund, the IRS recommends using its “Where’s My Refund?” tool at IRS.gov or via the IRS2Go mobile app. The agency aims to send refunds in less than 21 days.

How will I know if something goes wrong?

With so many tax scams in play right now, it’s important to monitor your tax filing status after you submit your return and to pay close attention to the communication you receive. The IRS will never initiate contact about a refund by email, text messages or social media, and no call from the IRS should sound threatening or require immediate payment. Instead, you should receive a letter if further taxes are due or if something is wrong.

If you receive a letter from the IRS stating that you had already filed or that there was another problem with your return, you could be a victim of tax fraud and your refund may have already been sent to someone else. Additionally, if you’re expecting a refund and it’s been longer than 21 days, check with “Where’s My Refund?” Even if you don’t expect a refund, it may be a good idea to check the site to ensure that a refund wasn’t fraudulently requested by someone else using your Social Security number.

If you have any further questions, feel free to contact us.

Image Copyright: pixelbliss / 123RF Stock Photo


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