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Tax Advisor: What If You Missed the Deadline on Your 2021 Tax Returns?

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As we write this blog today, April 18-Tax Day 2022, has passed. The deadline to file for most US citizens is over. 

You read this and say, “I missed the deadline. Now, what do I do?” 

The good news is that if you missed filing on April 18, then you have options. All is not lost and no, there won’t be any black helicopters landing in your backyard. You can still file, so all is not lost.

In fact, here are some steps you can take that will resolve your tax filing deadline miss situation:

  1. If you owe money on your 2021 tax return and have not filed an extension: You should file your tax return as soon as possible. The IRS hands down two penalties if you owe: failure-to-file and a late payment penalty. Failure-to-file penalty applies when your return is late. It is five percent (5%) of your unpaid tax bill for each month or partial month your return is late. It maximizes to twenty-five percent (25%). The late payment penalty is 0.5% of your unpaid tax bill for each month or partial month your return is late, up to a total of 25%. The bottom line is that the quicker you get your tax returns filed after the deadline and pay your bill, after being late, the smaller the penalty you will have to pay. However, if you are unable to pay your tax bill in full, you can request the IRS to put you on an installment plan. It doesn’t erase your late penalties, but it will protect you from the IRS garnishing your wages. Just keep in mind, that the longer it takes for you to file your return, the greater the late payment penalty.
  2. If you don’t owe money for your 2021 tax returns: You may be due a refund from last year’s returns, but you missed the April 18 deadline, anyway. Believe it or not: You’re safe. You will not be penalized. You will have to wait longer to receive your tax refunds, though. Nevertheless, file your tax returns soon so you can get your money back.
  3. Missed deadline unknowingly: That’s okay, too. Just submit your return as soon as you can. Next year, if it looks like you may be filing your tax returns late again, ask for a tax extension by the filing deadline. *** You then have six more months to file your return. If you request the extension and still don’t get your return completed by the deadline, a late payment penalty will apply to any unpaid taxes from the current tax year. You won’t be charged with the aforementioned failure-to-file penalty as long as that extension request is made on time. And you don’t even have to give a reason to be granted an extension. The IRS doesn’t ask why you need more time to file. 

So, you see, it isn’t “Doomsday” after all. You do have options. Just be sure to act quickly to save yourself money and stress. 

AK Burton, PC, knows the current tax laws and how to work with the IRS. Our experienced tax preparers can file your business and personal tax returns and represent you to the IRS. Call us at (301) 365-1974 for a consultation. 

We serve the Bethesda, Rockville, and Montgomery County, MD area.

*** If you’d like more information on IRS Tax Return extensions, visit the IRS website.  

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How to Save Money on Your 2021 Tax Returns

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Tax season has already started. Many people are scrambling to get all of their documents together for their 2021 tax returns.

If you’re one of those people gathering their tax documents, keep in mind some of the following four ways you can save, now, on your 2021 tax returns:

  1. Contributing to your retirement account, such as an IRA, may reduce your tax bill by reducing your taxable income (depending on your tax bracket). This works especially if you haven’t maxed out on your 2021 IRA contributions. Your tax deduction is determined by your total income and filing status. You or your spouse may be covered by a retirement account at work- which limits your tax deduction. You can contribute to your IRA until April 15, 2022, so you have time! The limits are $6,000 per year for 50 years old and under and $7,000 per year for people over 50 years old.
  2. Charitable donations: Donations to qualified charities last year may help you save on your 2021 tax returns. Taxpayers who don’t itemize can also benefit. For the tax year 2021, individual taxpayers may deduct up to $300 in contributions to qualified charitable organizations. Married couples filing together can deduct up to $600 in cash donations made to approved charities. Donations must be made by Dec. 31, 2021. This deduction may reduce your taxable income for 2021 and, in turn, lower your federal tax bill.
  3. Deduct eligible business expenses: Self-employed business owners must keep detailed business expenses. These expenses may include business meals, business travel, legal fees, computer purchases, subscription fees (Microsoft Word, etc.), accounting fees (QuickBooks, etc.), marketing/advertising costs, and other eligible business expenses. Business deductions lower taxable income, which results in a lower tax bill for 2021.
  4. Earned Income Tax Credit (EITC): this is available for the 2021 tax year dependent on your adjusted gross income (AGI). Income limits vary depending on your filing status, AGI, and the number of dependents. If you qualify for this credit, it may offer significant tax savings. 

As you prepare to file your 2021 tax return keep these 4 tax savings tips in mind. Please consult your tax preparer for more information.

AK Burton, PC, knows the current tax laws and how to work with the IRS. Our experienced tax preparers can file your business and personal tax returns and represent you to the IRS. Call us at (301) 365-1974 for a consultation. Our office is open. Covid protocols if requested. We serve the Bethesda, Rockville, and Montgomery County, MD area.