Got money to Pay the IRS on April 18th?

So, you don’t have the money to pay the IRS by the April 18 deadline? Don’t make the dumb and expensive mistake of not filing your tax return. Instead, you should apply for an extension. 

You can defer paying your tax bill until later. But, you will be charged penalties and interest until the tax is filed and paid-in-full. Do not just sit on the couch and do nothing. If you do nothing you will be penalized to the tune of 5% of the unpaid balance each month, up to a total of 25% (after five months). After that, you’ll be charged interest at the 0.83% per month. If an extension is filed it will give you until October 17, 2017 to file. If you are still short come October you can then try to arrange for an installment agreement to pay your tax debt.  

See IRS Form 9465 for more details on how to apply for an installment agreement or talk with your Tax preparer, Ken A. Anaya about this form.

Do you get the full credit as Boss of the House?

A very common mistake is for an unmarried individual taxpayer filing status as a “Single” taxpayer when they qualify for the much-more tax favorable “Head-of-Household” (HOH) filing status.

Your filing status is used to determine which standard deduction you are eligible for and what tax credits will be available. Discuss this topic with your tax preparer as they will need to evaluate the one that will result in the lowest amount of tax that is best for you. 

 

Talk with your Tax preparer Ken A Anaya about this deduction.

Did you purchase a New Home in 2016?

If you bought a home last year, you will find a tax write-off buried under all the paperwork accumulated from the slew of documents your escrow company provided. You are able to deduct mortgage points paid by the seller. It is best to bring your final escrow documents when having your taxes prepared. I know that being able to write off an expense someone else has paid for sounds too good to be true. But it is true, so bring this paperwork when having your taxes prepared. 

Talk with your Tax preparer Ken A Anaya about this deduction.

Did you make any Charitable Contributions in 2016?

It is best to have all charitable contributions in receipt form to back up the donation of $250 or more. The tax law says no write-off is allowed should you not have a receipt or letter from the organization. Cash donations of less than $250 made in 2016 are not allowed unless you retain either a bank record that proves the donation. Like for example, a canceled check, bank statement, or debit/credit card statement. Taking it one step-up is to have a written acknowledgment from the organization on their letterhead. Small undocumented cash contributions, such as money placed on church collection plates and cash dropped in red buckets (Salvation Army) at Christmas time won't qualify for write-offs. Get a receipt or have a canceled check from the charity to lock in your rightful tax break.

As for noncash charitable donations of used clothes and household items, you get no deduction unless the stuff is in “good” condition. “Household items” include furniture and furnishings, electronics, appliances, linens, and the like. In other words, you get no charitable write-off for donated junk. See IRS Form 8283 at www.irs.gov for more details on the rules for noncash donations. 

Talk with your Tax preparer: Ken A Anaya about this deduction.