When we think of filing our Federal income taxes, we generally focus on the April 15 deadline. But if you filed an extension for your 2011 income tax return, which was originally due on April 17, 2012, then you are required to file your income tax return by October 15, 2012.
If you prepare your own income tax returns, you better make sure you don’t miss the extension deadline. On the other hand, if you have a CPA do your taxes, you should really contact them immediately as CPAs may be backlogged with the preparation of tax returns for this extension deadline.
It is important to timely file your tax return by the extended due date so that you do not lose out on tax refunds or other credits that you may have available to you. Each year millions of dollars of unclaimed refunds from the Internal Revenue Service and from taxpayers’ state treasuries go uncollected. If you have a refund due to you, you should take full advantage to obtain it.
In the event you have payment due and are unable to make full payment, the Internal Revenue Service generally may agree to an installment agreement so that you may pay the taxes over a period of time. You can get more information about installment agreements on the IRS website at www.irs.gov.
It is also a good idea to plan for tax plan for 2012. You can do a rough estimate to determine if you will owe or have a refund. This can be done by taking your current year-to-date payroll information, adding the additional income payments you have remaining. From there you can then review your prior year’s income tax return for other interest, dividends and itemized deductions to prepare a simulated income tax return for 2012. If you have a significant refund then you may want to reduce your income tax withholding for the remainder of the year. If you will owe a significant amount it would then be necessary to increase your income tax withholding or pay an estimated tax payment.
In addition, if you participate in a flexible spending account you will want to make certain you claim all of the amounts contributed before the end of the year. If you do not use all of the amounts contributed before the end of the year you may have to forfeit the unused amounts.
Charitable contributions of cash, clothing, furniture and other non-cash items should also be donated before the end of the year. You should request a written receipt from the charitable organization as proof of your contribution. If you make a contribution by check you will want to make certain that the checks clears before December 31. If your check clears in 2013 you will have to claim the deduction for 2013. Therefore, make contributions in advance of the end of the year to deduct the contribution in 2012. An exception to this rule is if you make a contribution by credit card in 2012 you can claim the deduction in 2012, even if payment to the credit card company is made in 2013.
If you have an Individual Retirement Account (IRA) you may want to consider converting the IRA into a Roth IRA. There is no income cap for conversions, as the income cap has been removed. All taxpayers, including high income earners, can convert to a Roth IRA whenever they want as long as they pay the appropriate taxes. Thereafter, as long as the taxpayer satisfies certain rules, a distribution from the Roth IRA will be tax-free.
For most of us, fall is the time for cider mills, football and the changing of the leaves. Unfortunately, it is also the time for taxes if you filed an extension, and to begin thinking about tax planning before year-end. Don’t wait until the last minute to get your extension return done and filed, or miss some valuable deductions because you forgot about them. Make a plan to get started today to give yourself plenty of time to find your records and receipts. And if you require the name of a CPA, please feel free to contact me at email@example.com and I will provide you with a referral.