Daily Money Tip: Take your time with tax filing . . . it's worth it

Posted: April 08, 2014

Don't pressure yourself or your tax preparer to file your return by April 15, says a local expert. Haste creates errors, and many tax accountants and other filers extend their own and their clients' returns more often that you might expect.

Filing for an extension? There's no truth that this will increase your chances of being audited, says David Zalles, a tax planner in Blue Bell. He estimates that 10 million extensions are filed each year, and the tax authorities don't have the resources to audit more than a fraction of those.

"When you file an extension, you're simply asking for more time to properly file a complete and accurate return," said Martin Abo, certified public accountant with offices in Mount Laurel and Morrisville, Bucks County.

However, you still need to make an estimated payment with your extension, using Form 4868. At the very least, include some payment with your federal tax-return extension if you owe a balance of more than a few hundred dollars. Also include a first-quarter estimated payment with state, city, and local extensions, Zalles adds.

Usually, you will owe some penalties and interest with an extension. However, if you file for an extension and pay at least 90 percent of your actual tax liability by April 15, you will not be faced with a "failure-to-pay" penalty, if the remaining balance is paid by the extended due date, Abo notes. The extended due date is now Oct. 15.

Zalles highlights one last-minute deduction that you can still take before the April 15 deadline: your IRA contribution. You can still sock away money in your IRA up until April 15 and include that as a deduction. And self-employed filers can contribute to what is known as an S.E.P. IRA until Oct. 15.

You don't need to pay for an extension; make an estimated payment and file IRS form 4868 and any state extension forms using the IRS's list of Free File Alliance member companies ( www.irs.gov/freefile).

K-1 forms

Investors in master limited partnerships (MLPs) wrote in with a helpful website for K-1 tax forms - used for tax filings by partners in a business, as opposed to the company itself. On the site Tax Package Support ( www.taxpackagesupport.com), look for the "Investor Relations" tax-information tab. Register as a user and sign up to receive notification when the K-1 form for your investment is available for download.


erinarvedlund@yahoo.com

646-797-0759

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