FORT WAYNE, Ind. (Indiana’s NewsCenter) – The last day to file taxes is tomorrow, April 17.
It seems to be a day, regardless of income level or social status that is annoyed by the masses. Filing taxes on the final day is not uncommon. In fact, according MSNBC.com, the Internal Revenue Service estimates about 25 percent of taxpayers wait till the last minute to let Uncle Sam know what they have earned over the course of the last year. The same article reports that the IRS expects approximately 10.5 million Americans to file for an extension tomorrow.
Jeff Griggs of Griggs CPA Firm in Fort Wayne says the IRS can levy two penalties after tomorrow’s deadline: Failure to file and failure to pay.
Failing to file a tax return by April 17 results in a payment penalty of 5 percent per month on the total amount due up to 25 percent of that total amount.
A failure to pay penalty is 0.5 percent per month up to 12 months.
Griggs says acting on the assumption that one might receive a refund and choose to file or pay late is not the best strategy.
“If you're more than 60 days late, it's a $135 minimum penalty or 100 percent of the tax due. So, a lot of people say, ‘Well I get a refund anyway, so I don't have to worry about it,’ but they could get hit with this $135 penalty. So the IRS just wants information timelier.”
Filing for an extension is easy and can be done by going to IRS.gov and searching for the 4868 form or searching for a tax extension. The document is one page. Those hoping to secure an extension will need the amount withheld on their W2 forms. The extension is good for six months and everyone is eligible.
In the Hoosier State, according to Griggs, a federal extension will automatically be applied to the state level, so there is no reason to search for a state extension. Extensions are also done automatically for military members overseas.
Others who did not wait till the last minute to file may have already received a refund from the IRS. That refund, whether granted to a young adult in his or her first job out of college or a recent retiree, might feel like a windfall. For that reason, Doug Lockwood of Hefty Wealth Partners in Auburn says having a plan for the refund is the best decision one can make.
Lockwood says those in possession of a check from Uncle Sam should not be in a rush to either spend it or save it. He says that until the full scope of one’s finances is taken into account, cashing the check can wait.
For the young man or woman starting out, Lockwood advises seeking the advice of a parent or someone “who has been around the block.” He says the same advice is applicable to a person who has done their taxes for 50 years.
“You don't have to act quickly. That thousand dollars might be burning a hole in your pocket, but the best thing to do is to take your time, think about where you're at, where you want to go and what's the best course of action.”
Lockwood says long-term and short-term goals, debt, a weekly or monthly budget and any future expenses should be considered before jumping to save or spend the refund.
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