In the News: Tax Tips for Procrastinators
I’m a procrastinator by nature. I can’t help it. I wait until the last possible second to do things - even important things that I know I need to do, like file my taxes. Many of you reading this may be in the same boat as me, staring at the calendar and wondering how it’s possible you still haven’t gotten around to filing yet.
I hear you, and I also hear the clock ticking as it counts down to the April 17 deadline.
As luck would have it the AICPA has helpfully compiled the Ten Top Last Minute Tax Tips to help get us through the process as painlessly as possible. In fact, one of the most helpful last minute tax tips for me was the news that I can have my CPA e-file for me. So this year, even though I waited until the last minute I won’t have to sprint up the steps of the Post Office just to make the deadline, as I have in years past.
In more tax related news, USA Today readers reached out to Sandra Block with their tax questions, and she in turn called on the expertise of AICPA members to provide answers. Questions deal with issues such as energy credits, Roth IRAs, 401(k)s and a number of other tough to figure tax situations. For example, one reader inquired about the rules for claiming an adult child as a dependent who relies on his parents for tuition, room, board and health insurance, but does not live with them. According to Earnest Almonte, former chairman of the AICPA, there are several tests to claim a dependent, one of which is residency. However an exemption to the residency requirement exists for temporary absences due to education, so if the parents meet all other tests they can claim the child as a dependent.
Taxes are a critically important issue for millions of small businesses in the U.S. Edward Karl, CPA, CGMA, vice president of taxation of the AICPA, spoke to the Las Vegas Review Journal about the importance of small business owners protecting their company from audits and ensuring they pay no more taxes than they are legally required to. They best way to do that is to work with a CPA, as business owners who do their own taxes run the risk of missing deductions and business opportunities. Karl said a lot of businesses make the mistake of talking with their accountant only at tax time, which is not the time to do tax planning. He said it should be done as early in the fiscal year as possible to consider all the different rules and deductions. "It's an accountant's job to help advise a small business owners so they can focus on running their businesses," Karl said.
One last tax tip - If you won’t be able to make the April 17 deadline because you require additional time to prepare your return, you should submit a request for an extension by filing IRS Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.” The return can also be e-filed, or mailed by midnight on April 17.