By Tracie Utter
CPA (Certified Public Accountant)
CPO (Certified Professional Organizer)
Utterly Organized (est 2004)

When taxes are involved, why do you procrastinate?

I do not like doing my income taxes, 1040 what?!…solution: delegate, pay someone else to pull together the information needed for your return and pay someone to prepare your return

I do not like preparing the information to give to someone to do my taxes!…solution: delegate, pay someone to get your financial papers/information organized…paper, digital, all of it

I do not have enough money to pay someone to help me prepare for taxes!…solution: ask your spouse or someone trusted to do it for you or come up with a plan to stop procrastinating, see ideas below

I do not like to plan!…solution: if you do not want to do your own taxes or prepare for them or pay pay someone else or plan or take responsibility then it is time to realize you are an adult and this is something you have to do. Consider filing an extension which gives you 6 extra months, extending the deadline to Oct 15th. Please note, you still have to pay by April 15th

I do not have enough time to do any of this! Then buy someone else’s time especially if you have trouble concentrating. Hire someone with the appropriate skill set to help. If you do not have enough money, try trading services. We all have to set priorities with our time. If you health or some exception keeps you from this, you might want to call the IRS to discuss options.

I do not have enough money to pay my taxes!…file your return on time without payment. If you are not going to pay for a long time (over a month or so), call the IRS to discuss. You will still be charged penalties but your call will be noted in their files.

There are many tasks we do not like to do but have to, taxes are no different. Pick what works for you:

Delegate – this is my absolute, number one suggestion. Hire someone (similar to me) to come to your home and get these tasks done for you. I suggest hiring someone with (even limited) tax knowledge. Expect to pay by the hour, $40 to $90/hour. More than $100/hour means they should be preparing your return.

(for the DIY crowd) Develop a task/checklist – Turbotax offers a good checklist as a starting point for the average taxpayer. Generally, your taxes are fairly consistent from year to year (until you have life events: birth of child, marriage, death, divorce) so you know what your tax accountant will want. Make a list, as you received the information, stack it together, then organize the stack a more or so before tax day and give to your tax accountant.

Set appointments with yourself – put appointments on your calendar (by yourself) to work on your taxes. If you continually miss them, you might need to delegate. Realize, tax preparation is not in your thinking style and your efforts could be used in a more meaningful manner.

Set appointments with paid professionals – force yourself into a deadline by creating accountability. Your tax accountant will expect you to bring the needed information.

Understand your taxes – your taxes are not as hard as they seem. There are many tax rules but most of them do not apply the average individual. Have you taxes prepared by a professional and understand what they did. With that understanding, narrow down the information and paperwork you need to maintain. You might be doing something (like keeping every receipt) because someone told you to when in reality, your tax accountant only uses a small part of the information you provide.

Force yourself – get paperwork and information organized now, not later…commit to this goal, if you stray, set-up consequences for yourself…”if I miss my goal, I will hire someone to do it for me”. Understand why you procrastinate so you can change accordingly.

Change your perspective – being scared or angry about your taxes is not getting you anywhere, equivalent to beating your head against a wall even when you know it hurts. Accept the task and be angry about something else.

I will say one more time – if you continue to procrastinate and do not like it then hire someone to help you. The tax deadline is not going to change but you can.

By Tracie Utter
CPA (Certified Public Accountant)
CPO (Certified Professional Organizer)
Utterly Organized (est 2004)

IRS

Here we are, at the deadline for individual taxpayers…and your stress level is high (extremely) because you procrastinated. What can you do?

It is the NIGHT BEFORE and you are unorganized, yikes!

You need to extend the deadline for filing form 1040 (see link for instructions) which means your return is not due for 6 months (October) but payments must be made by 4/18/16. You can make a payment without providing a return but you can not provide a return without paying. Not paying might result in penalties which are pricey. Use form 4868 to extend your deadline.

How much do you pay? If you are an employee and completed a W-4 when you were hired, you are probably okay, however, other forms of income could result in additional taxes due. Do what you can and call a tax accountant ASAP. Every day you do not pay counts…it adds up.

Filed an extension, I can relax, right?

Yes, but not too much. I assume this is a matter of procrastination so do not put yourself in the same situation again. Start right away, in this order:

Find documents related to INCOME –

Find all papers associated with INCOME earned: If you earned the income from a company, they are required to provide Form 1099 or W-2 (must have been post marked 1/31/16). If you are an independent contractor, you will receive a 1099 stating how much you earned; if you are an employee, you will receive a W-2 (generally, you can get the same information from your last paycheck or the one closest to 12/31/15). One exception, 1099’s are only required if you earned $600 or less. FYI, your employer will send their copy to the IRS so there is no getting around this. If you lose it, call your employer and request another copy.

Find remaining documents: Many sources of income are reported on form 1099 followed by the type: taxable interest earned on investment accounts is reported on “1099int”, dividends on “1099div”, retirement distribution “1099-R”, and many others, the catch all is “1099MISC”. They come in the mail or e-mail starting early February through March.

There are other forms with odd names such as, your share in a partnership is reported on a K-1. Be aware, if you earned money from something, there is a good chance a form has been issued to you.

Self-employment INCOME This calculation is left to you (or your accountant). Accuracy is important. Do not commit fraud by hiding income (if your clients paid with cash, include it). If you get caught, it will be ugly. Worst case, go through your bank statements and add up the deposits that represent income (please tell me you deposited client payments and/or have a merchant account, if not, find anything…any support that documents income).

Find documents related to DEDUCTIONS –

Some deductions will be mailed to you by the company you pay. For example, mortgage interest paid is reported on form 1098. All forms should be received in the first few months of the year.

Finding deductions are harder because you have to calculate them yourself. The first problem – learning what are allowable deductions. If you are not comfortable figuring this out on your own (there are an endless books, blogs, articles, etc) then hire a tax accountant, at least for one year. Take time to understand your return. Maybe you can do 2016 which might save hundreds in accounting fees. I have yet to see a tax accountant charge less than $250/return, even for easy returns. I do mine with Turbo Tax, but be cautioned, my return is easy because it has been the same for many years and my finances (and thinking) are organized.

What happens when you miss a deduction –you are paying more taxes than you need to. A perfect reason to hire a tax accountant rather than miss deductions. Self-employed individuals will benefit the most. If a missed deduction is significant, amend your return… a good reason to hire an accountant.

What else –

The complexity and quantity of tax laws will make your head spin. Fortunately, a lot of them do not apply to the average individual. If you are unsure, go to a tax expert. Get your stuff pulled together, at least semi-organized, so they can understand. FYI – for my clients, I prepare the information that is sent to their tax accountant. My fee is much less than most tax accountants. Believe me, disorganization will result in higher tax preparation fees.

General rules – if you are going to be audited, the IRS has 3 years to let you know. However, the rule is for individuals to keep their returns and support for 7 years. Because I am a nerd, I have every return I ever filed (but not the support)…this is not necessary unless you like to reminisce, like me.

I like this post regarding organization for tax time official source. This post is for the reformed procrastinator:

7 Simple Ways to Get Organized for Tax Season

Posts tagged "tax"

How to stop procrastinating on (next years) taxes