It’s almost time to pay the taxman. If you haven’t filed your returns, don’t fret. These tips can help ease the pain.
4. File an extension (Form 4868). If you simply can’t get your paperwork together, file an extension — but still send an estimated payment, warns Strawn. “An extension means you’ve been granted more time to file your return,” says Strawn. “You have not been granted an extension to pay what you owe.” Interest on what you owe begins to accrue on April 16. Sending an estimated amount instead of an exact amount will save you from the penalty of paying a fine above and beyond the interest. Thankfully, since an extension can be filed electronically, it’s relatively painless.
5. It pays to show a profit. While the idea is to pay as little as possible, the IRS expects you to make a profit, says Tyner. If you don’t show a profit for three out of five years, the IRS will consider your business a “hobby,” which means you have no deductions. Plus, says Tyner, showing a loss hurts in other ways: It hurts your loan viability and it lowers your social security.
6. It’s still the beginning of this year. Though you’ve waited until the last minute to file last year’s return, you’re in a good position to set yourself up for this year’s. Strawn offers these practical tips: Don’t spend time wishing you had done things better. You didn’t. Learn from your mistakes and plan now for the next filing season. Document well. Embrace a filing system — even if it’s not something you like to do.
It may seem as if filing a return is more of an art than a science. Though the gray areas of deductions give you a headache, they make a good accountant’s heart race at the possibility of “finding money.” Hire an accountant who will not only prepare your taxes but also help prepare you by guiding you with a tax system you can use all year.
To deduct or not deduct? That is the question.
You buy food for staff because you have a lunch meeting: Yes
You buy food for staff because you want to be nice: Not likely
Airline and hotel for a two-day show: Yes
Airline and hotel for a week because you had a two-day trade show: Not likely
Magazines for clients: Yes
Magazines as reading material for the break room: Not likely
Donuts and coffee in the waiting area: Yes
Donuts and coffee in the break room: Not likely