It’s late in the tax season, and you might be scrambling to gather receipts and documentation to prepare your tax returns.
According to the IRS, up to 25% of Americans wait until the last two weeks to prepare file their taxes.
There’s nothing wrong with waiting: especially if you owe money. Other reasons people file late is they have been too busy or just forgot.
Filing taxes late in the season doesn’t have to be difficult or maddening. All you must do is prepare.
Organize and Document
The best way to prepare for filing taxes is to be organized. Take action to put your tax documents in order.
Put everything in one place. Whether that’s a physical box or digital folder is up to you.
Then make this the focal point for all your financial documents. This will minimize wasted time between you and with your tax advisor.
Key Tax Documents
- Form W-2 – Income (Your employer must mail this form by January 31, 2021)
- Form 1099-Int – Interests earned on accounts
- Form 1098 – Mortgage interest
- Business Income & Expenses
- Medical Expenses
- Social Security Numbers – You, spouse & dependents
Get the Tax Organizer Questionnaire
If you need help getting organized, check out Smith Patrick’s Tax Organizer for a list of questions to consider when collecting documents before preparing your taxes.
It’ll help you find the next steps in the process and answer the questions your accountant needs to file your taxes.
Extending the Tax Season
If you cannot gather all your documents and are running out of time, you can request an extension for filing your return. Use Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return to apply for six more months to file.
There’s no benefit to filing late. Your best move is to file and figure out the payment later.
Remember: An extension to file is not an extension to pay taxes owed.
What Happens If You File Your Taxes Late…
Smith Patrick has an article on this! Click here for an in-depth article on filing taxes late.
In sum, both filing late—or ignoring the tax deadline altogether—can bring serious consequences, including interest & penalties, garnished wages, increased penalties, and even criminal charges.
Prepare for Next Year
No matter the reason for the last-minute filing, taxes don’t have to bring despair.
Stay prepared year-round. Get organized for next year now. Plan to reconcile transactions and manage receipts each quarter rather than waiting until taxes are due to get started. This will make the process less overwhelming and easier for the future.
Just remember, when you’re done with your taxes, you can relax and enjoy being stress-free.
To check out our other articles on business topics, click here.