Ahhhh, the vernal return.
I could be referring to the sight of grown adults dressing up in bunny suits, or cherry blossoms appearing on street corners or the rainfall after months of drought. But, I’m not. I’m talking about the annual tax return!
April 15th has long been established as the most widely practiced of American holidays, and we at Blue Tax are some of it’s most faithful ardent followers as written in our testament, the U.S. tax code, handed down to us by the sacred US Treasury. Not as excited as we are? That’s to be expected, but we’ll try to make the logistics as direct as possible. Today, we’ll discuss exactly where, when and how to file, leaving the ‘why’ up to you and yours.
When do I file?
Remember, if you’re a small business owner with your fiscal year ending in December, you should have been making quarterly payments yearlong, with your first payment becoming due on April 15th. If not, it’s due four months to the day from the last day of your fiscal year. In another lesson, we covered how to calculate your quarterly payments and how to submit your annual return using the Schedule C form. For individuals, same story. This doesn’t mean throwing it in your mailbox on the 15th and wiping your hands clean. The envelope must be properly addressed and postmarked by the 15th. If the 15th falls on a weekend, it must be postmarked by the following Monday or day after the holiday it falls on.
There are of course, exceptions to this rule. If you run a business off-shore or are on deployment on that date, you’ll get an automatic two-month extension. Your tax return will then become due on June 15th. Be sure to include a statement with your return that explains the reason for your late tax return, though the IRS should already be expecting it. IRS Publication 3 also details additional extensions that are available to members of our Armed Forces.
Where do I file?
Online of course! You “could,” in theory, still go down to your library, pick up Form 1040, fill it out, carefully attach forms and schedules in sequence, sign it, seal it up, pay for postage, put it in the mailbox and twiddle your fingers until the IRS responds.
But here’s a list of the top five reasons why you shouldn’t, and should instead use the IRS’ e-filing system.
1. E-filing reduces the number of errors.
The IRS’ computer will automatically reject your return if you try to submit with any errors. When the most common errors have to do with writing in the wrong boxes, or bad handwriting, e-filing can save you a headache.
2. Getting your return takes days instead of weeks.
If you sign up for direct deposit and your return is accepted without a hitch–in which case you would have been notified through the IRS “Where’s My Refund” tool–you can get your funds in as little as ten days. Compare this to six weeks when filing through the mail, and that’s not accounting for delays if your return isn’t immediately accepted.
3. It’s more economical for everybody.
Look, I know you’re probably not terribly concerned about the IRS saving money, but on a day when you’re awareness of your civic duty as a taxpayer is glaringly obvious, you might think again. Submitting online saves big on administration costs: with an e-filed return costing 9 cents instead of $3.50. Also, it saves you time, money and postage.
4. Tax return software is your best friend.
Considering the complexities of the tax code, most filers aren’t tuned in to all the breaks that they might be eligible for. Filing software like TurboTax helps identify these bonuses for you, earning you big bucks on your return.
How do I file?
When submitting your return, hitting “send” isn’t all there is. Since you’re submitting without signature, you’ll have to apply for a PIN by calling in to the IRS at 1-866-704-7388.
Using information from last year’s return, they’ll establish your identity and give you a five digit number which you’ll use to electronically “sign” your return. This is an opportunity for me to remind you: SAVE ALL YOUR TAX RETURNS. That way, this information is on hand next time, and in case the IRS comes back four years later asking questions, you have it ready to answer.
If you decide to go the old-fashioned route, you must print and sign your completed 1040 with schedules and forms attached using the numbers on the top right corner to put them in sequence.
Those owing tax should send payment by check or money order payable to the United States Treasury. Make sure you get your basic information on there if it isn’t already printed and note in the memo field what year you’re paying for. If you can’t budget for it right now, give the IRS a call and set up a payment plan. Just don’t put it off!