When You Need to File an Amended Tax Return

Tax season is over and you might think that you can rest easy now that your return has been filed but that's not always the case. Sometimes you need to file an amended tax return, whether you realize it or not. Here are some of the common reasons for filing an amendment.
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The Honest Taxpayer's Guide to Settling Tax Debt

We pay our federal income taxes through a voluntary pay-as-you-go payroll deduction, or through a system of quarterly estimated payments to report earnings not subject to payroll deductions. The system encourages upfront payments and can add additional tax debt to the taxpayer who underpays.

If you have underpaid your taxes, you'll need to get IRS Form 2210, read the directions, and do the daunting and complicated math. On the other hand, you can just file your return and wait for the IRS to do the work and send you a bill.

IRS tax payment options

The filing deadlines for individuals is April 15th (April 18th for 2016). One well-kept secret, though, is that if the IRS owes you a refund, the filing deadline is moot, because April 15th is the date when all arrears in tax payments are due. Late filing in cases where the taxpayer is owed a refund only results in a delay of said refund.

On the other hand, taxpayers who owe the IRS, have a number of payment options:

  1. Pay it by check and include the check with the return.
  2. Pay online directly from a bank account.
  3. Pay with a credit or debit card.

Choices 2 and 3 can be done online. See the IRS webpage, Payment Options: Pay Online, Installment Plans and More for details and other options available to you.

What if I am late making the payment?

paying tax debt owed irs helpThe April 15th deadline (for most taxpayers) starts the clock on interest and other penalties on unpaid tax. The IRS calculates the interest from the due date of payment, based on the federal short-term rate plus three percent--and the interest compounds daily.

Then there are failure-to-pay and failure-to-file penalties, which can amount to a maximum of 25% of the amount owed. IRS Tax Topic 653 has details on late tax payments and the associated penalties.

You can apply for a tax filing extension but…

The big but here is that, although you can file for an extension for completing your tax return, if you owe tax and want to avoid penalties, you must pay the amount due by April 15th. IRS Form 4868 has instructions on obtaining an automatic six-month filing extension.

Installment Agreements with the IRS

Taxpayers financially unable to pay the tax debt immediately can make monthly payments by entering into an installment agreement. Paying the tax debt in full through such an approved agreement can reduce or even eliminate the payment of penalties or interest, but you must file all required tax returns on time.

Read more and download the IRS Installment Agreement forms from the IRS Payment Plans, Installment Agreements webpage.

What happens if I don't pay?

Non-payment of taxes will set in motion a series of written notices from the IRS. Failure to resolve the indebtedness can result in liens, as well as bank account and business asset forfeitures, all of which have the full force of federal law backed up by court orders.

If you need help...

Tax planning is all about mitigating last year's impact on your personal and business finances, as well as starting off on a much better footing for this year and beyond. Contact Dukhon Tax and Accounting by email or give us a call. We specialize in both personal and small business tax accounting.


Buying Time and Clearing up Your Tax Debt to the IRS

The IRS is like a collection agency on steroids. Each passing day that you owe back taxes accrues additional penalties and interest on the amount due. But you still have options -- a tax filing extension and installment plan, to name two -- if you want to avoid compounding your problems with ruinous IRS levies and liens.

The tax is due on April 15th, regardless

If your tax situation is so muddled or complicated that you cannot gather up what you need to file by April 15th, you can submit an extension request -- IRS Form 4868 -- online or by mail. Your new due date will be October 15th. However, filing the form does NOT EXTEND your due date to pay what you owe. According to a piece on the US TaxCenter website:

“[A] tax extension gives you more time to file your income tax return, but it does not extend the deadline …. This means that you need to know how much tax you owe and be ready to submit payment by April 15, whether or not you are requesting a tax extension.”

Consider filing your taxes on time if you can

tax advice for delaying tax filing to irsSo your best approach is that if you can meet the filing deadline, but don’t have the funds to pay your tax bill, file anyway. The penalty for failing to file is usually more than penalty for failing to pay your taxes. If the IRS judges that you used the extension request simply to kick the problem down the road, your request for an extension could be denied and you could be faced with additional penalties for failure to file.

Setting up a time payment plan for taxes

The good news is that according to the IRS, you can work out a monthly payment schedule through an installment plan. You are eligible for an extended time payment plan if:

  • you owe no more than $50,000 in individual taxes
  • you owe $25,000 or less in payroll taxes if you run a business
  • have filed all required tax returns

Other conditions apply

The not-so-good news is:

  • Setting up a payment schedule is not free. The IRS currently charges $120 to set up a standard agreement or payroll deduction plan -- $52 for a direct debit arrangement.
  • Any future tax refunds will be applied to your debt until it is paid in full.
  • You must pay your minimum monthly bill when it is due.
  • You must also file future tax returns and pay all your taxes in full and on time.

To recap

So April 15th is when the IRS expects you to file your tax return and settle your tax bill. File an extension request if your situation is so complicated that you need time to gather the information you need for a complete and well-documented return. Otherwise, file on time and pay what you can and pay the rest later -- with penalties. If you want to avoid most or all of the late penalties, work out an installment payment schedule. The IRS will work with you.


Fast Facts: Affordable Care Act

Dukhon Tax advisors have been answering many questions in relation to ObamaCare and the Affordable Care Act (ACA). We hope these fast facts help with your 2014 tax preparation.

facts about obamacare

  • The IRS opens the 2014 tax filing season on Tuesday, January 20, 2015.
  • Taxes must be filed by the IRS deadline: Wednesday, April 15, 2015.
  • When filing 2014 taxes, you must report the status of your health care coverage and any cost assistance you received.
  • Forms 1095-A, 1095-B or 1095-C from your insurer will detail the months you had coverage. In the event you have multiple sources of coverage, you will receive multiple forms.
  • Did you, or a dependent household member, go three months or more without minimum essential coverage? You will need to make a Shared Responsibility Payment or file an exemption.
  • Exemptions are only valid with an Electronic Confirmation Number (ECN). This number is provided by the Health Insurance Marketplace. Exemption requests take time to process. Ensure you apply early to avoid late tax filing penalties.
  • Taxes filed in 2015 are subject to the 2014 fee rate. Cost assistance is based on the 2013 Federal Poverty Guidelines. Annual fee rate for not having insurance (2014) is $95/adults, $47.50/child, family $285, or 1% of household income to a max threshold. In 2015, the annual fee rate for not having insurance jumps to $325/adult, $162.50/child, family $975, or 2% of household income to a max threshold.
  • Income below the minimum threshold for filing a tax return? You are exempt from the fee for not having coverage, but may qualify for Medicaid or Marketplace cost assistance.
  • Made less than you projected? Opted not to take the full tax credit in advance? If you did not update your Marketplace information, you need to deduct the remaining amount on your Federal income taxes. See Form 8962 – Premium Tax Credit (PTC).
  • Small business owners can use the Small Business Health Options Program (SHOP) to obtain coverage and credits for their employees.
  • Minimum essential coverage can only be obtained during open enrollment.
  • Unlike the typical methods of collection (liens, jail time), the IRS is not able to enforce the Individual Shared Responsibility Provision. Instead, the IRS will withhold your Federal Income Tax refund.

To learn more about the Affordable Care Act, the Individual Shared Responsibility Provision or view IRS publications, please visit: http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/Individual-Shared-Responsibility-Provision

For personal or business tax preparation, or to obtain guidance with the Affordable Care Act, the team at Dukhon Tax is ready to help. Visit us at DukhonTax.com


Tax Filing Begins January 31st!

tax firms bostonIt's tax time again!  We are looking forward to providing you with outstanding tax consulting and preparation services for the 2013 tax year filing period.  We'd like to inform you of some resources available to help you organize your tax documents and schedule an appointment with us.

 Tax Organizers

*These organizers are optional but are very helpful when gathering your tax information.

Options for Submitting Your Tax Information

  • By Appointment - We invite you to schedule an appointment with us!
  • Mail In - You may mail your tax documents and organizer to our office at:

Dukhon Tax and Accounting

60 Brighton Ave Suite A

Allston, MA 02134

  • CLIENT PORTAL - You may use our secure client portal to submit your tax documents.  The portal is an electronic file cabinet where you may upload your tax documents.  It is safe and secure and will protect your data.  Also, we will upload your tax returns and other documents for easy access any time in the future!
  1. To request access: E-mail  [email protected] or submit a request through our website.
  2. To access the portal: Please login at Client Portal or just click the link in the banner above.
  3. Upload your documents and we will promptly prepare your return.

Tax Filing will begin on January 31st 2014.  In most cases, you will be eligible for electronic filing of your return.  This is the fastest and most accurate way to file your tax return.  If you elect direct deposit of your refund, you can receive it in as little as 5 business days.

We look forward to speaking to you very soon!  If you have any questions/concerns, please contact our office 617 651 0531 or  [email protected].

                                                                                                                                               Sincerely,

                                                                                                                                                Dmitry Dukhon


IRS to Delay Tax Season

IRS to Delay Tax Season

The Internal Revenue Service will be delaying the start of the 2013 (tax year) tax season for approximately two weeks.  This is one of the residual effects of the government shutdown.

Per the IRS:

"The Internal Revenue Service today announced a delay of approximately one to two weeks to the start of the 2014 filing season to allow adequate time to program and test tax processing systems following the 16-day federal government closure. 

The IRS is exploring options to shorten the expected delay and will announce a final decision on the start of the 2014 filing season in December, Acting IRS Commissioner Danny Werfel said. The original start date of the 2014 filing season was Jan. 21, and with a one- to two-week delay, the IRS would start accepting and processing 2013 individual tax returns no earlier than Jan. 28 and no later than Feb. 4. "

The delay isn't too serious.  However, people who were expecting their refunds in late January will be disappointed.  The IRS article mentioned the advantages of e-filing your return:

"The IRS will not process paper tax returns before the start date, which will be announced in December. There is no advantage to filing on paper before the opening date, and taxpayers will receive their tax refunds much faster by using e-file with direct deposit. "

At Dukhon Tax and Accounting we e-file all eligible returns (98% of returns, in our experience, are eligible).  This is the safest and most efficient method of filing.  A copy of the e-filed return is then uploaded to the client portal and tax documents are available at any time.  This is a huge help when filling out those FAFSA or other financial applications!

Here's a few more fun facts from the IRS:

"IRS processes, applications and databases must be updated annually to reflect tax law updates, business process changes, and programming updates in time for the start of the filing season. 

During the closure, the IRS received 400,000 pieces of correspondence, on top of the 1 million items already being processed before the shutdown. "

As we always say, the IRS and system of taxation in our country is ever increasing in complexity.  Now is a great time to speak to someone in our office to see how we can help you with your tax needs.  We'll begin to e-file returns as soon as the IRS allows it.  In most cases, we can prepare the return and be ready to process it as soon as it is ready.  Don't delay and get your refund early!

Call 617 651 0531 or e-mail [email protected] or use the contact form below!

All the best,

Staff at Dukhon Tax and Accounting