Premature Filings and Current Payments
It’s TaxQuips time from TaxMama.com®
Today TaxMama® wants to talk to you about filing your tax return before you have all the information and to address all the money you’re going to need by April 18th .
STOP! PLEASE, PLEASE STOP!
TaxMama® is getting more questions than ever before from people who have already filed their tax returns – then learned about missing W-2s, 1099s, investment income and whatever.
Really? You didn’t know about that extra $10,000 income you earned? Or the extra $30,000 of gambling winnings you didn’t report on the original return? Or that Schedule K-1 you were expecting, or the $50,000 IRA or 401(k) distribution you took, or…? Who else can know about all these things, but you? It’s your life. Remember it.
Sure, you can amend your tax return after you file it.
But before you can amend, you have to wait for the tax return to be fully processed and for your refund to be issued – or your balance to posted and/or paid. When there are discrepancies, it can take the IRS months to process the original return.
Then, when you do file the amended return (even electronically), expect to wait more than 20 weeks, because as of March 12, 2022, the IRS had 2.2 million unprocessed Forms 1040-X.
On the other hand, if you wait an extra 2-3 weeks to file your tax return, it will be processed more quickly, because the IRS won’t find discrepancies – and your full refund will be issued to you sooner.
Now, what’s if you figured out that you owe more money? Do you really want to wait weeks or months to amend, piling up underpayment penalties?
You have no choice about the filing. BUT… you can avoid penalties by paying the balance you owe. Pay online only – remember how far behind the IRS is on processing paper.
Be careful to specify tax year 2021 and tax form 1040 for last year’s balance due.
Now, we are rapidly coming up on April 18th. So you may also have a first quarter estimated tax payment due. Use the online payment system.
This time be careful to specify tax year 2022 and tax form 1040ES for this year’s estimated tax payments.
Along with last year’s balance due, and this year’s estimated tax payment being due, any contributions you want to make to your IRA (Roth or Traditional) must also be funded by April 18th this year.
That may turn out to be a lot of money. Do you have that much set aside? If not, you have about 3 weeks to pull it together. (Don’t feel too bad, one of my clients had to come up with nearly $90,000 – but that also included some smart planning to fund his retirement account.)
We are in a different world this decade. With all the logistical changes due to COVID19 staffing and operations, the IRS is trying to create more electronic self-service tools and phone bots to help taxpayers avoid sitting on the phone lines for hours – only to get a hang up in the end. I encourage you to take advantage of the electronic tools as much as possible.
And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At http://iTaxMama.com/AskQuestion
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