Today TaxMama hears from OC in Los Angeles with this problem. “We couldn’t afford an accountant in April to help us with our taxes so we filed for an extension. October 15th is imminent and we still can’t afford an accountant. We may end up owing for 2007. 2008 has been a very difficult year due to lack of work in my wife’s profession in the entertainment industry. Do you know of any free resources to help us with filing our taxes? If we don’t file by October 15th, what are the repercussions?”
You can’t afford NOT to hire a tax professional.
Not filing by October 15th AND owing money means that you instantly pick up 25% penalties for late filing, and 25% penalties for late paying. In addition, you will pay interest on both the taxes due and the penalties. The total of all that is much higher than the price of a tax professional – apt to be about $500 or less.
OR…you could use H&R Block’s Tango service for $70 and get to call them to get all the answers you need.
Now, if you’re talking about needing help to do more than just prepare the tax return – to do your accounting for you, that would cost more.
But I don’t understand. If your wife was not employed for most of the year, she had plenty of time to help out. Why not use some of that to do the bookkeeping for the company. Surely, it’s not that complicated?
So what do I suggest for right now? Get your act together and complete your bookkeeping. Worst case, make some quick and reasonable estimates. Figure out your income (add up all the deposits to your business bank account or your total sales). Figure out your expenses – estimate, if you have to, based on what you normally spend on your business in an average month.
Prepare a summary for a tax professional – and get it done – NOW!
Since these are estimates, if they turn out to be wrong, you have three years to amend (correct) your tax return.
By filing on time, you avoid the 25% non-filing penalties. You reduce the non-payment penalties to .5% per month, instead of 5% per month. And all the related interested is reduced, too. So you understand why not filing on time is not an option!
And what’s if you can’t pay your taxes due? Here are some tips for you. http://taxmama.wpengine.com/month/taxblues.html
What can keep you out of trouble for 2008? Get started on your records right after you finish up 2007. If you’re not great at bookkeeping, or computerized bookkeeping, pick up a Tax MiniMiser with the instructions on how to use it to your advantage – www.homebusinesstaxcuts.com .
As to free resources? IRS has an entire site full. So does TaxMama.com – www.taxmama.com – it’s filled with tips about just about every tax issue you can run across. All the forms are there on the IRS site – and so are publications you can use – start with Publication 334. But you don’t have time for all that with a few days to go.
Forms – http://www.irs.gov/formspubs/lists/0,,id=97817,00.html
Publications – http://www.irs.gov/publications/index.html
Business information – http://www.irs.gov/businesses/index.html
And remember, you can find answers to all kinds of questions about tax preparation and other tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]
- Ask TaxMama :: Where taxes are fun and answers are free
- www.TaxQuips.com :: The number ONE free tax podcast online
- H&R Block’s Tango Service :: They claim it includes unlimited answers to your questions
- TaxMama’s Tips :: Tax Paying Blues
- Tax MiniMiser and TaxMama’s e-book :: http://snurl.com/homebiz-tax
- File Download (0:00 min / 1 MB)