Tax preparation is a simple and straight forward exercise for taxpayers who have all the required documents and information. However, many taxpayers seem to always find themselves in a sticky situation every time they get to prepare their tax returns. Below are some of these common tax preparation challenges and tips on how you can get around them:
- Missing Information – One of the more common issues when it comes to tax preparation is missing documentation. These documents include W2 forms, 1099 forms, charitable donation receipts, and receipts for qualifying medical expenses. For W2 forms, one can request his or her employer for a copy of the forms. You can also request the IRS to send you a copy of the W2 forms. You can request copies of the 1099 forms from the issuing institution. Many of these institutions may also have a downloadable 1099 copy on their website.
- Time Limitations – Another major tax preparation issue is running out of time. One may not have enough time to compile the tax documentation and prepare the tax returns. You may consider hiring the services of a tax preparer to handle your taxes. However, if it is nearing the tax deadline and you have not yet identified a suitable tax preparer to handle your taxes, you may consider filing for an extension to give you more time to prepare the tax return (until October). However, you must ensure that all due taxes are paid by the April deadline to avoid interests and penalties for late payment.
- Submitted Form with a Mistake – If you discover that you made a mistake on your tax return form after you have already submitted it, there are options to have the error corrected. If it is a mathematical error or other simple errors that may not affect the due taxes, the IRS will most likely make the correction on your behalf. However, if it is an error of wrong amounts included or of omitted entries, you may need to file an amendment. To file an amendment, you can download Form 1040X “Amended U.S. Individual income Tax Return Form” from the IRS and file it. Filing an amendment will delay the processing time and you may have to wait a little bit longer before getting your tax refund.
- Do Not Have Cash to Pay Due Taxes – If upon prepare your tax returns you discover that you do not have enough money to pay the due taxes by the deadline, do not get stressed – there are flexible options for settling the bill. You can file for an Installment Agreement (IA). This way, you can pay off the due tax bill in insta;lments over a period of 6 years. However, you will be charged interest and late payment penalties. You can also request for a 90 day extension to raise the funds.
- Did Not Attach a Check – If you discover that you filed the returns and did not attach a check for payment of taxes, you can still send the check separately. To do so, you will need to attach Form 1040-V, “Payment Voucher” and indicate your personal details, and the tax period being covered by the check.