7 Common Filing Mistakes
After speaking with literally thousands of everyday persons about tax over the years, we have compiled a list of the top most common mistakes related to tax. Here are some of the worst offenders - use the contact form below if you need assistance with any of this.
"I don't have the money to pay, so I will hold off on filing." This one of the single worst mistakes to make - the IRS wants you to file your taxes, even if you do not have the money. The penalty for "failure to file" individual returns is 5% of the balance due per month or portion of a month (even one day past the 15th). The failure to pay is 10 times less at .5%. Also, there are payment plan options for nearly any type of situation. Contact us for options.
"My LLC/corp/partnership had no activity - so I did not file." This is not correct. Many business entity types have state as well as federal requirements, some of which have steep penalties known as "failure to file" penalties and interest. Contact us if you need us to evaluate if your entity has an annual requirement.
"I knew I would owe, so I am deciding to hold off on filing." Making this decision is based on flawed information: the due date for your tax is April 15th, not when you file. Filing in February does not mean payment is due in February. The April due date is the same.
"I will file my partnership/s-corp in April along with my personal taxes." This is incorrect timing and will create a penalty for failure to file - s-corps and partnerships (including multi-member LLCs) are due in March, one month ahead of the individual tax deadline. The logic here is that the K-1s must be distributed to the partners. Please do not make this error.
Do not forget your crypto losses. We know quite a few taxpayers lost money in the crypto crash of early 2018, so please make sure you take your losses. We are also currently amending returns for taxpayers who forgot about their 2017 losses and hacks, so see us if that is the case.
Clients that are sure they are due a refund are quick to send us the W2/1099/K-1, but clients that suspect they owe tend to wait until the last minute. This is not the best move - we understand that it is not psychologically appealing to owe and there is a human element of procrastination in such cases, but you do not want to be left scrambling attempting to understand the new tax code & digging for deductions at peak time when nearly every decent accountant is at capacity. Contact us right away while there is still time to assess options.
What is number 7? Email us and we will send it!
Otherwise, have an excellent tax season & contact us if you need help with any of these issues.