Are You Up to Date on Your Tax Returns?
Are all your tax records in order? Have you filed all your returns? If you have not, what's preventing you from completing this task? Not filing your return when you are required to can get pretty expensive as penalties and interest start accruing on the due date of the return. If you do not file timely, you could also forfeit a refund that was due to you. You generally have 3 years from the original due date of the return to make a request for a refund, so lets not leave money on the table. If the return you have not filed is not the current year return, make sure that you use the correct forms for that year.
You can file an extension to file, which gives you more time to get your return in. This does not give you an extension to pay your tax balance due if you have one. As mentioned before, it can get pretty expensive the longer you wait.
If you have a completed return and know your tax liability, filing the return and determining a method to start reducing that liability is a good option. Ignoring your liability will simply keep the penalties and interest piling on, and before you know it your balance due has morphed into something too big to behold, and who wants to be beholden to that? The IRS offers an installment payment plan option for making those payments, take advantage of it, if it fits your needs.
The agency has also made it much easier for tax payers, by giving a single extension until October 15th, previously it took 2 extensions to have time until October 15th to complete and submit the return. Now you really have no excuse.
You can take this time to collect all your documentation, and hopefully to set up a system that automates collection of your information for future years. Get mileage logs if you use your automobile for business, or for your employer's benefit and you do not get reimbursed. Get business expense logs or use an automated system to keep your business income and expense records. A simple manila folder can be used to keep records for all the documents that come in usually saying "Important Tax Document." Other major categories could be: Income: Wages, Salaries and other Income, Investments, Education Expenses and Loans, Medical Expenses including after-tax insurance premiums and mileage to medical facilities, Automobile Expenses, Child and Dependent Care Expenses, Real Estate Expenses for up to 2 properties - your homestead and another home: Mortgage Interest, Property Taxes, Mortgage Insurance Premiums, Sales Taxes, Charitable Contributions, Moving Expenses, Business Income and Expenses and Rental Income and Expenses among others.
"No matter who you are, making informed decisions about what you do with your money, will help build a more stable financial future for you and your family." Alan Greenspan