IT'S OFFICIAL

From IR-2020-134 dated June 29, 2020 (highlight is mine) ―

“The Department of the Treasury and IRS today announced the tax filing and payment deadline of July 15 will not be postponed. Individual taxpayers unable to meet the July 15 due date can request an automatic extension of time to file until Oct. 15.”

An automatic extension is requested on IRS Form 4868.  You can also request an extension online – go here,

FYI, the automatic extension extends the time to file, not the time to pay. If you think you will owe your “uncle” you should send a check with the extension to avoid penalties and interest.

July 15th is also the deadline for filing most state returns.

TTFN

TODAY IS "THE DAY"!

Today is the final deadline for filing your 2011 federal and state individual income tax return.

That is not to say that I, and my fellow tax professionals, will no longer be faced with any more GD extensions this year (I wish!).  It only means that today is the last day to mail in your properly extended 2011 Form 1040 or 1040A, and state tax return, and be considered to have filed on time.  I still have some GD extensions to do – and probably have not received them all “in hand” yet.

There is really only a problem if you owe your Uncle Sam (and/or whatever Uncle applies to your state).  Penalties are assessed on the unpaid balance due.  If you will be getting a refund you can file your 2011 return next year and you will not be penalized.

There is a big difference if you do owe money to an "Uncle".  On the federal level the monthly penalty rate for “filing late” with a balance due is ten times as much as that for “paying late” – 5% per month (.05) vs ½ of 1% per month (.005).  Penalties also increase on state returns not timely filed.

So the bottom line – if you have not already done so, get your 2011 tax returns in the mail today, even if you cannot pay all, or any, of the tax due.

And, of course, do not walk into a tax professional’s office at lunch time today and expect to have your return prepared in time to meet the deadline.

TTFN

IT AIN'T NECESSARILY SO

The news media, and other tax blogs, have been reminding us lately that extended 2010 Form 1040s (and 1040As) must be postmarked by next Monday – October 17, 2011 – in order to be considered to be timely filed.

While this is basically true, NJ taxpayers (thankfully for my late filers) get until October 31, 2011 to file extended 2010 Form 1040s and 1040As and 2010 Form NJ-1040s – because of Hurricane Irene.

All highlights in the below quotes are mine.

The IRS says in IR-2011-87 –

“The Internal Revenue Service is providing tax relief to individual and business taxpayers impacted by Hurricane Irene.

The tax relief postpones certain tax filing and payment deadlines to Oct. 31, 2011. It includes corporations and businesses that previously obtained an extension until Sept. 15, 2011, to file their 2010 returns and individuals and businesses that received a similar extension until Oct. 17. It also includes the estimated tax payment for the third quarter of 2011, which would normally be due Sept. 15.”

The relief is available to “certain taxpayers in Connecticut, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Puerto Rico and Vermont”.

In New Jersey the relief applies to the following counties - Atlantic, Bergen, Burlington, Camden, Cape May, Cumberland, Essex, Gloucester, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Salem, Somerset, Sussex, Union and Warren.  That is all 21 counties of New Jersey – so all of New Jersey gets the extension.

The NJ Division of Taxation tells us -

“New Jersey’s tax relief . . . extends to taxpayers who reside or have a business in all 21 counties of New Jersey impacted by Hurricane Irene and New Jersey considers an affected taxpayer qualifying for tax relief to include businesses, individuals, those with tax records, and relief workers in areas disrupted by Hurricane Irene.

Taxpayers now have until October 31, 2011 to file their New Jersey tax returns such as individual income tax, corporation business tax, sales tax, inheritance tax, estate tax, partnership and other business taxes administered by the Division of Taxation and to submit payments for any return and/or payment, including estimated payments which have either an original or extended due date occurring on or after August 27, 2011 and on or before October 31, 2011.

The extended due date permits individuals and businesses that received a filing extension until October 17, 2011 to have until October 31, 2011 to file their returns. Businesses that previously obtained a filing extension to September 15, 2011 are also covered by this relief and have until October 31, 2011 to file their returns. Estimated tax payments for the third quarter of 2011 are now due October 31, 2011 instead of September 15, 2011.”

Of course this additional time does not mean you should continue to procrastinate.  If you have not already gotten your 2010 tax “stuff” to your preparer – get off your arse and do it!

TTFN

CALL A SPADE A SHOVEL

Regular visitors to THE WANDERING TAX PRO know that there are a few distinct nouns that I constantly precede by a certain descriptive adjective or phrase. The noun and description are inseparable; they always have been, and always will be, joined together in my writings.

First there is the “GD extension”. And you know full well what GD stands for (not “government deferred” or even “gosh darned”).

I hate GD extensions! For the first half of my 40 tax-seasons in “the business” I did not have to deal with them at all - or at most two or three a year. But lately, especially since I “inherited” my mentor’s practice, and despite whatever I do to try to keep the number down, I always seem to end up with about 40.

As I have said in the past, it is difficult to explain to the “uninitiated” the fact that, after doing nothing but 1040s (and the state equivalents) 12+ hours a day, 7 days a week, for about three months, once I stop it is extremely difficult to motivate myself to look at another tax return. I find myself continually finding other stuff to do to avoid finishing the GD extensions.

I long for the days when the tax season truly ended on April 15th. I realize that there will always be GD extensions, but it is my goal to keep the number to at most a half-dozen (or less) really necessary ones.

And of course there is the “dreaded AMT” (for Alternative Minimum Tax).

What started in 1970 as an excellent example of the laziness of Congress (see below) - a quick fix to a highly publicized situation (an announcement by then Treasury Secretary Joseph Barr that 155 high-income households had taken advantage of the various deductions and loopholes available in the Tax Code at the time to totally avoid paying any federal income tax) – has grown into a true monster.

And, like the Frankenstein monster, it must be destroyed!

And finally - the “idiots in Congress”.

There are several adjectives and phrases that can be used to describe our elected officials in Washington (and elsewhere) – perhaps more today (and maybe the last 20 years) than at any other time in America’s history.

They are certainly self-absorbed. I suppose some degree of self-importance (although not quite at the level of a Donald Trump) is either a requirement for or a side-effect of becoming a politician. It is a known fact that the first and primary motivation and goal of any politician is getting re-elected, and not the proper administration of government.

They are obviously lazy, reacting to situations with the easiest quick and temporary fixes rather than responding to problems with serious thought and consideration.

They are incapable of independent thought, constantly quoting verbatim from the script written by their Party, and voting along strict Party lines.

And, along those lines, if a Democrat introduced a bill that would, for example, guarantee the end of our economic troubles for decades to come, Republicans will automatically vote against it for no other reason than the fact that it was not introduced by a Republican – even if they support the concept in the legislation. And vice-versa.

Perhaps the best way to sum up all of this, and more, in a proper description of the members of Congress, of all political affiliations and philosophies (“clowns to the left of me, jokers to the right” for sure), is to, as my British friends would say, “call a spade a shovel” and refer to them as idiots.

So when you read anything I have written, extensions will always be GD, the Alternative Minimum Tax will always be dreaded, and members of Congress, until they can prove themselves otherwise with any kind of intelligent or responsible action, will always be idiots.

TTFN

I HATE EXTENSIONS!

Today is the final deadline for filing extended 1040s (and 1040As). If you filed for an automatic extension back in April be sure to get your tax return in the mail today (see my note prefacing yesterday’s BUZZ edition).

I hate GD extensions!

For the first 20 or so of my 38 tax seasons I didn’t have to worry about GDEs. Neither my mentor nor I filed any. When April 15th came the tax season was truly over. We would work through the night on April 15 to make sure that all the returns that were in our hands were done. As I believe I have mentioned before, one April 15th the last client walked out our office door at 3:00 AM on April 16! As he left he promised to be earlier the next tax season.

Actually for the first 20 or so tax seasons I also did not have to deal with the dreaded Alternative Minimum Tax. It wasn’t until the 1990s that a client first became victim of AMT!

To be honest there is really no good reason to have to file an extension. I know that many are filed because of late K-1s, which are either received on April 15th or, due to extended partnership returns, not received until September 15th. But this is easy to fix – don’t invest in limited partnerships! As I have said many times before the minimal “return on investment” from LPs are not worth the additional work and aggravation involved with properly placing K-1 info on the various components of the 1040. But then brokers must get a higher commission from selling LP investments – so they continue to push them on their clients.

Actually there is a good reason for a self-employed person to file an extension. Extending the return also extends the time to make a contribution to a SEP or other self-employed pension plans. However you can have the return completely and properly prepared “on time” and just wait until you have actually made the contribution to mail it in.

Filing a GD extension extends the time to file the return. It does not extend the time to pay the tax. So filing an extension doesn’t help if you can’t pay the tax due by the April 15th deadline. As I advise my clients, file the return and pay whatever you can, if you can pay anything at all, and send the balance due when you raise the money or arrange for an installment payment plan with the IRS.

There is an “urban tax myth” that extending your return will help to avoid an audit. In my opinion, if you are going to be audited you are going to be audited based on the information reported on the return, regardless of when it is actually submitted. But even if you believe in this tax myth you can still have the return prepared “on time” and just not mail it in until October.

I long for an extension-free tax season. But, however much I admonish my clients to get their “stuff” to me on time, I expect I will continue to have GDEs each year.

Oh well – I can dream, can’t I.

TTFN