00:00 Speaker A
It is tax day in the United States. April 15th marks the deadline for individuals to file their federal income taxes with the IRS. It’s also the deadline for many state returns, although there are some exceptions. Joining us now to discuss some last-minute tax tips, we’ve got Andrew Gordon, partner at Gordon Law. Andrew, as of April 4th, the IRS has received more than 101 million returns. That’s actually down 0.4% from last year. So what do Americans who can’t file today need to know about getting an extension?
00:41 Andrew Gordon
Yeah, Brad. Filing tax returns is getting more difficult as more tax forms are being issued. More and more people don’t have what they need in order to file on tax deadline. So today is April 15th, it’s tax dead day. If you haven’t filed yet, you better get busy. But one other option is to file an extension. Filing an extension will give you an additional six months to file your tax return. And that’s important because there are two big penalties to be aware of. And that’s the failure to file and then the failure to pay penalty. By filing an extension, you’ll get an extra six months to file, but it is not an extension to pay. And what this means is that your payment is still due today. It’s due April 15th. And if you pay later, interest and a late payment penalty of 0.5% per month will begin to accrue. So, how do you avoid this penalty? The easiest way is to make an estimate of what you owe today with your with your extension, and that way penalties and interest will stop accruing.
02:23 Speaker A
And so, what if you can’t pay your taxes? Because even though as you were breaking down, an extension to file is not an extension to pay, but there are some people that really just can’t afford the figure and may be getting caught off guard when they’re getting ready to file.
02:53 Andrew Gordon
Yeah, so Brad, first of all, the most important thing to do is still file that extension or still file your tax return even if you can’t pay. But if you can’t pay, believe it or not, the IRS will work with you. They will allow you to enter into a payment plan, and we’ve helped clients have even 10 years to pay their IRS balance. And while you’re in a payment plan, the penalties are even reduced. So it’s a great way to have a monthly payment that you can pay towards that balance and not be in IRS collections, which is never a good place to be. Uh, but another thing to be aware of is that although the IRS gives taxpayers the option to use a credit card to pay your taxes, in many cases this also is not a good idea. You’ll be accruing a very high interest rate and you’ll be better off in many situations just reaching out to the IRS and working out a payment plan directly with them.
04:13 Speaker A
So, what are some common filing errors that you’re coming across this tax season?
04:21 Andrew Gordon
So these are some mistakes that not only I see in practice all the time, but the IRS has also said these are very common and have impacted people in receiving late refunds, but also substantial penalties. So today’s the tax deadline and if you’re rushing to get everything completed, another reason to file an extension is because as you’re rushing, you may make some big mistakes. And one of the most common yet simple ones is failing to sign your tax return. You might think who forgets this, but many, many people every year fail to sign and date their tax return, and as a result, their refunds can be delayed or even get penalties later on. Another big mistake is the wrong filing status. In the US, we’ve got married filing jointly, married filing separately, head of household, single. It takes an accountant to know all these rules and understand what fits best for you in many situations. However, a lot of people filing on their own choose the wrong status, and this leads to sometimes audits and large penalties, not to mention getting their refunds late. Another big one to be aware of today, tax deadline, is writing down your correct bank account information. Again, sounds very simple, but one digit that’s incorrect can lead to months or even years of delay in getting your refunds.