There are 4 weeks until the tax filing deadline
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There are still four weeks before the deadline for filing your taxes. For most Americans, it is April 18.
“They tend to go into avoidance mode, especially if it seems they may own money,” says Phyllis Jo Kubey a certified financial planner, president of New York State Society of Enrolled Agents. That is the worst strategy.
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Here’s what every taxpayer needs to know this season
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Here’s why your tax return may be flagged by the IRS
You must send in your return promptly, even if it is a debt. file for an extension to avoid the failure-to-file penaltyThis is equal to 5% of the unpaid taxes per month, up to a maximum of 25% Comparatively, the failure-to-pay fee is 0.5% per month, plus interest.
Kubey said that although an extension can prevent the penalty for failure to file, it doesn’t mean you won’t have to pay any taxes due by April 18. To avoid additional penalties or interest, however.
It is possible to file a timely filing. unlock options for your unpaid taxesAn example of this is a long-term plan for payment, also known as an installment agreementIf you owe less than $50,000 in taxes, interest and penalties will apply.
It’s now much easier to handle IRS collection activity,” she said. There are many great online tools to set up installment payments.
Individual filers as well as businesses have found it increasingly challenging to file timely and accurate returns due to many changes in tax laws during the pandemic.
Bryan Hasling (CFP, Lodestar Private Asset Management, Alamo) said that “the demand for professional taxes services might be higher than what I’ve seen.”
It may be difficult for you to secure a tax preparer if you need assistance. Asking for help to file an extension before the deadline could result in a surcharge.
Hasling stated, “I believe people get thrown off.” But it is the busiest period of the year.”
If you are preparing tax returns yourself, file electronically with direct deposit. Double-check your work to avoid delays.
Take, for example: IRS has urged filersWhen reconciling advance child tax credit payments and stimulus checks, it is important to be careful. Manual review of simple mistakes may be required before you send your return to the agency.
Also, it’s easy to make mistakes answering the “virtual currency” questionAccording to Hasling, it should be on the first page of your tax returns. IRS recently shared guidanceConcerning cryptocurrency and taxes
It asks, “Have you ever received, sold or exchanged any virtual currency at any time in 2021?”
Although buying cryptocurrency in U.S. dollars is not required, it will be necessary to check the box if you have sold, traded, mined or purchased digital currency.