The end of the year is a busy time for many people, and as a result, tax planning often gets pushed to the side. Don’t let this happen to you, as year-end planning can save you a significant amount of money. Tax planning is the process of creating a financial plan to maximize your tax return and ensure you pay the lowest taxes possible. The process includes calculating expected quarterly tax payments, creating a plan to avoid penalties, and utilizing any available deductions. Taking the time to create a year-end tax plan benefits taxpayers in the long run.
When Is the Best Time to Begin Tax Preparation?
The best time to complete tax planning is right before the end of the calendar year, ideally in November or December. Taxpayers need to know how much income they have made throughout the year up until the end of October to be able to calculate their expected taxes. Creating a plan to pay taxes throughout the year will ensure that taxes are paid on time, the payments are manageable, and no penalties accumulate. The deadlines for making estimated tax payments throughout the year are January 15th, April 15th, June 15th, and September 15th.
Consequences of Not Creating a Tax Plan
All taxpayers are required to submit their tax return by April 15th, with all taxes due to be paid on that date. If quarterly taxes have not been paid, the amount that is owed on April 15th can accumulate to an overwhelming amount. Individuals and businesses who have not completed prior tax planning frequently choose to extend their tax return. It is important to understand that extending the tax return deadline does not extend the payment due date. If the April 15th tax return deadline is missed, the IRS will charge a penalty of 5% for every month that taxes go unpaid. As a result, the longer you put off paying your taxes, the more money you will accumulate in penalties and fees.
Why You Should Utilize a CPA
Taxes can be complicated. With a Certified Public Accountant, you have an expert to help you calculate your estimated tax liability for the year and figure out which deductions you are eligible for. With proper tax planning, a CPA can make sure the taxes are paid in full by January 15th so penalties and interest don’t accumulate. Depending on what your tax liability is, just having a meeting with a CPA can save you thousands of dollars. Larry Bradford, CPA has over 35 years of experience as a Certified Public Accountant and can help you come up with a plan to pay the lowest taxes possible and avoid paying penalties and interest. To schedule an appointment, send an email to firstname.lastname@example.org or call 512-402-0049.
Did you know that filing late taxes can result in the complete loss of your tax refund? The IRS takes filing taxes very seriously, and if you don't remember to file on time, you should be aware of the consequences you could face.
Filing Late Taxes Puts Refunds at Risk
A tax refund is a refund of the taxes that an individual or corporation has overpaid to the government. A tax refund can be obtained only after filing a tax return. The IRS has a set of guidelines for when you can file your taxes and still receive a refund. If you fail to submit a return for two years past the tax submission due date, you will not be entitled to any refund whatsoever.
Many individuals believe that if they are entitled to a refund, they aren’t required to file their taxes. This is a common misconception that can result in significant repercussions. Not only will filing late result in the total loss of a refund, if an individual does not file for more than three years, they can face federal criminal prosecution or jail time.
Preventing the Loss of Your Tax Refund
The only way to avoid forfeiting your tax refund is by staying caught up on tax filings. You should always file your taxes, even if they are late. Larry Bradford, CPA can help you stay current with your tax filings to protect your refund and avoid potential consequences from the IRS. To set up an appointment, send an email to email@example.com or give our office a call at 512-402-0049.
Be prepared. Tax audits are coming for the middle class. The United States government recently announced a plan to provide the IRS with $80 billion in additional funds and allow them to hire 87,000 new IRS employees under the Inflation Reduction Act. This upsurge in funding and hiring will result in an aggressive increase in auditing tax returns. The IRS is going to be much more thorough when it comes to collecting taxes and examining tax returns. This also means that there will be higher taxes for anyone the IRS believes has not been paying their fair share.
Who Is at the Highest Risk for a Tax Audit?
Tax audits are a surprisingly common event. Last year, the IRS conducted over 659,000 audits. With the incoming influx of IRS employees, the number of audits will drastically increase. The IRS is not just looking for those with the highest incomes; they are also going after lower and middle income earners. Statistics show that low-income households are five times as likely to be audited by the IRS compared to everyone else. Individuals who have completed their own tax return and those who own a business are also at an extremely high risk of getting audited.
How to Protect Yourself From a Tax Audit
If you want to avoid an audit, it's best to hire a CPA to help you prepare your taxes. With their knowledge of handling tax preparation, a CPA will make sure everything is in order so that you won't be audited. In general, if a CPA completes your tax return, you will not be audited.
Don't get caught unprepared. Larry Bradford, CPA has over thirty-five years of experience as a Certified Public Accountant and will utilize his expertise to help you avoid a tax audit. Give our office a call at 512-402-0049 or send an email to firstname.lastname@example.org to set up an appointment.
What are the Consequences of an Unsubmitted Tax Return?
The consequences of an unsubmitted tax return can range from a fine to jail time. In the event that a taxpayer does not file their tax return, they will be required to pay a fine for each month that they are delinquent. According to the IRS, the Failure to File Penalty is 5% of the unpaid taxes for each month that the tax return is late.
Taxpayers who do not file their taxes may also be subject to criminal penalties such as additional fines and/or jail time. If a taxpayer owes more than $25,000 in unpaid income tax or has willfully evaded paying these taxes, then they could face up to five years in prison and up to $250,000 in fines.
Additionally, individuals who wait more than three years without filing their taxes completely forfeit their refund. It is important to note that individuals who are in tax delinquency are at the highest risk of getting audited by the IRS.
What Should I Do if I Haven’t Filed My Tax Return Yet?
If you haven’t filed your tax return yet, it’s not too late. There is no time limit for tax collection. However, you need to act quickly. If you have accumulated years of unfiled taxes, don’t make the mistake of continuing to wait. Tax returns can be completed going back well over 10 years. Start the process of filing your taxes now to avoid increasing consequences and completely missing out on your refund.
Larry Bradford, CPA can help you work through your unfiled taxes and provide you with a fresh start. Give our office a call at 512-402-0049 or send an email to email@example.com to set up an appointment.