The time has come, TaxMama® said, to talk of many things. Filing deadlines, disaster extensions, and various confusions this year’s filing brings.
Here it is, another October filing deadline. This deadline applies to most individuals and calendar-year C corporations. (You do know that your partnerships, S corps and 1041s were due last month, right?)
Well, first of all, the good news – in the face of bad news. Those people in the path of Imelda will have until the end of January to file. https://www.irs.gov/newsroom/irs-announces-tax-relief-for-texas-victims-of-tropical-storm-imelda
( Here is the main IRS disaster page. See if your area is affected – and any special deadlines that might apply – https://www.irs.gov/newsroom/tax-relief-in-disaster-situations )
Then, in California, land of fires, floods and faults in the earth, some of our utility companies are turning off power TOTALLY in many parts of the state. Shocking and rather unheard-of in 21st century civilization. But after the utter conflagration that destroyed Paradise last year, this is actually a prudent move during fire season. Since the utilities are about half a century behind in their routine maintenance, any spark sets off another fire.
Why bring this up when talking about deadlines? Both the IRS (privately to tax pro organizations) and California have announced that they will waive late-filing penalties for anyone affected. They both encourage taxpayers to do their best to meet the deadline. But if they cannot, just respond to the penalty notice by telling them you were affected by the power shut-down. (Be SURE to print out the notice related to your area as support for your claim.)
Also, expect the IRS California Wildfire page to be updated to include the current 2019 fires – https://www.irs.gov/newsroom/tax-help-for-california-wildfire-victims .
What about if you’re still trying to prepare your tax return and you don’t have any of the natural disaster excuses – but you are too frustrated and annoyed due to missing information and new tax law confusion? Well, you’re not getting any breaks. So what should you do?
Even if you’re missing information, don’t understand Sec 199A, or other parts of the Tax Cuts and Jobs Act. Do the best you can to estimate, project, or compute the missing or confusing information as best you can. If you’re really not sure about the numbers – tell the IRS. And tell them why. Include a Form 8275 disclosure statement and identify each line in the tax return that you estimated. Include a worksheet, spreadsheet or explanation for each item – and explain why you had to estimate the amounts. Do the best you can with this. And remember, you have three years to amend the tax return once you get better information.
The benefit of doing this? The main benefit is to avoid the 25% late filing penalty that will kick in almost immediately after October 15th. The other benefit is, you get it done and reduce your stress. You now have time to get help to fix any shortcomings in your return.
Some business owners (especially those with no employees) still have time to reduce their balance due by opening and funding a SEP-IRA until October 15th, if you don’t already have one open (or fund your solo-401(k) if it’s already open.) Be SURE your financial institution sets it up properly and on time. Be absolutely certain to get the funds in and designated as 2018 contributions if you want to claim the deduction on your 2018 tax return. (Of course, if you have employees, make sure they are covered and funded as well – so this strategy may not be as easy for employers.)
If you have a balance due, try to pay it in full. Though your interest on that balance is only about 3% – 4% per year, the late payment penalty is ½ % per month. That runs from April 15th.
Remember to make your estimated tax payments for 2019.
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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