(Title – with apologies to the film – The Russians are Coming! The Russians are Coming!)
It’s TaxQuips time from TaxMama.com® .
Today TaxMama® wants to talk to you about the very last filing deadline for calendar year taxpayers filing 2021 tax returns.
Dear Family,
The time has come, the Walrus said, to speak of many things.
Of needless delays, sad tales and ignoring all the nagging pings.
(apologies to Charles Lutwidge Dodgson)
The good news is, you have a couple of extra days to finish filing all your 2021 final returns – until Monday, October 17, 2022, instead of October 15th.
That includes personal tax returns and calendar-year C corporations returns (among certain others).
The better news (depending on your perspective) for filing deadlines – is the additional time, until February 15, 2023, available to people who were affected by the various, hurricanes, storms and disasters including Alaska, the entire East Cost, and even Puerto Rico. (Yup they file US returns, too.)
https://www.irs.gov/newsroom/tax-relief-in-disaster-situations#collapseCollapsible1665513380562
The bad news
And this is really, really bad. Tax professionals are reporting actual threats and hostile actions from their last minute procrastinating clients. This isn’t just something to brush aside. Tax professionals have actually been shot by angry clients – and the industry is responding.
Many tax professionals have now come to the conclusion that they will be firing uncooperative clients. Some will be fired now – even with just a few days left to go. Others will be given solid deadlines to meet next year – and if not met, those clients will be shown the door. Still other clients who have been bullying and rude will be rejected forevermore.
In fact, to avoid problems, I have always had a policy in place – if you’re rude to my staff, you are never welcome to return. Period. Other firms are now adopting this policy, as well.
The biggest issue – taxpayer procrastination. Before April 15th, tax pros review all the information and look at the data from last year to determine if you will need to make a 2021 payment when they file the extension for you. Around that time, or soon afterwards, they give you a list of “To-Dos” – documents to get in order to complete your tax return.
Then what happens?
The cooperative clients get the materials and give everything to the tax pros – and their tax returns get done quickly.
The procrastinators? The firm has to waste time calling, emailing or mailing requests to them repeatedly. And finally, the (often) very charming client shows up about a week before the final filing deadline all proud, with most, but not all, of the requested documents, expecting you to finish their returns immediately. And when rebuffed in favor of clients who got their materials in before they did – they are suddenly not so charming anymore.
So, for now? What should you do if your tax return is not done yet?
- If you’re working with a tax professional, get them EVERYTHING they will need in order to complete your tax return by Friday. Leave nothing out.
- If you are still missing some information – either get off your keister and get the records or WRITE the estimated amounts to be used for this year’s tax return. Don’t expect your tax pro to do the digging this weekend. There just isn’t time.
- If you have been turned away by your tax pro at this late date, don’t fight them.
They will return any ORIGINAL documents you gave them. If you gave them only copies or scans of documents, then you should have them. It’s not their responsibility to dig up those records for you.
- Log into your favorite online tax prep software and start entering all the data TODAY. You can finish it up over the weekend – after you have done your own work to dig up the missing information.
Honestly, these days, practically everything is online. You can log into your various accounts and download year-end statements for mortgages and other loans, credit cards, investment accounts – perhaps even medical expenses.
You don’t have time and just have to estimate amounts? Fine. Do that. But explain how you arrived at those estimates by including a statement with your tax return. And explain that you will file an amended return once you get the actual amounts.
Yes, even if you’re wrong (try not to be too wrong, to avoid penalties), you have 3 years to file an amended return.
But, whatever you do – FILE T TAX RETURN. Not filing, you’re immediately subject to a late filing penalty of 5% per month. Does that start in April when the tax return was originally due?
Or does it start in October if you filed an extension? I don’t actually know for sure; but think it will start in April – so you’ve instantly incurred a 25% penalty. OUCH!
Sorry to make this such a negative post. But the IRS now requires tax professionals to apply a much higher level of due diligence and verification than ever before. In addition, we have several new tax law changes that took effect this year. And so many of the advance funds or corrected refunds that the IRS issued – that it’s taking longer than ever to prepare tax returns – even for the ideal clients. The IRS has issued so many erroneous collections notices (because payments were not posted) – that we have a lot of other time demands to prevent these collections actions.
People are working longer hours, often through the night. Tempers are flaring – both among clients and tax pros. Expect the industry to change next year. If you want to work with your tax professional next year – treat them with respect and respond timely to all information requests.
For now – don’t call your tax pro about “where is my return?”
When it’s ready, THEY will reach out to you.
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
To make comments, please drop into the TaxQuips Forum.
