File Your Tax Return Or Get An Extension?

spotlightFiling a tax return does not focus a spotlight on you.

Really.

I regularly see clients who have not filed returns because they have some issue with the IRS.

They either have taxes that will be owed with the unfiled return, or taxes owed from earlier periods.

They think they are avoiding trouble by not filing.

Not so.

It seems that it takes weeks, or even months for returns to get entered in the system.

I have seen no evidence that collection action is triggered by filing a return even with a balance due.

Tax penalties coming and going

The IRS levies two separate penalties for non filers: a penalty for not filing the return and a separate penalty for not paying the tax.

Perhaps you can’t pay all you owe with the return, but why incur an avoidable penalty for not filing a timely return?

Tax penalties are not dischargeable in Chapter 7 until they are more than three years old. Contain the damage: file on time.

Further thoughts on why filing taxes sooner is better than later

Image courtesy of Johnarobb.

Time Running Out To Claim Prior Year Tax Breaks

hourglass-23654_1280

Time is running out on your 2011 tax return. Whaaaat?, you say.  You’re working on 2014 between now and April 15th. But if you’re one of those people who overlooked a tax deduction or, better yet, a tax credit like EITC, you’re running out of time to amend your 2011 return and capture some of that money. An…

What Kenny Rogers Teaches Us About Getting Out of Debt

2904165056_7f6647574d_b

    You’ve got to know when to hold ‘em, know when to fold ‘em; know when to walk away, know when to run… So goes the gambler’s advice to the young card player in the hit Kenny Rogers song. Hum along as we think about how we play our cards when we’re in debt: the hardest…

5 Small Business Mistakes You Can Avoid

rp_Fotolia_31788444_S.jpg

Everyone tells you what to do to succeed in business;  you also need to know what not to do if you don’t want to fail. Running your own business is the classic American dream.  It’s romantic and heroic. The romance of self determination, market recognition, and profit obscures the fact that the overwhelming percentage of…

The Surprising News About Chapter 13

specialedition-frame

I’ve got news for you: There’s a government program that lets you pay the balance on your credit card without interest and owe nothing more. Meet Chapter 13. I want to pay off my credit cards, but the damned interest rate makes it impossible. Consumers often sing this lament.  They could pay back what they’ve charged if…

The One Person You Must Tell About Your Bankruptcy

Spill the beans concept.

Most people who file bankruptcy don’t want anyone else to know. Some of my clients try to hide their break for financial freedom from friends and neighbors. Others are worried about their boss finding out. Occasionally, someone will try to keep it from their mate. But trying to hide his bankruptcy nearly cost one client…

Loan Modification Excuses No Longer Good With Courts

mortgage mod shredder cartoon

  Some excuses never seem to wear out. There seems to be no limit to the number of times a mortgage loan servicer can claim they haven’t received all the documents they need. Then, they base their denial of a loan modification on the borrower’s lack of responsiveness. Whether your mental image of the problem is…

Why Tax Software Is Lousy Purchase

5930176734_380196d14c_z

Why pay for Turbo Tax or its competitors when, odds are, you can get it for free? Unless you like burning money. Seventy percent of American taxpayers qualify for free tax software. If your income was $60,000 last year or less, you can use commercial tax filing software for free through the IRS FreeFile program….

Mix Old Debts & Good Faith Payments For Bad Results

mummy case wikimedia

Old debts don’t live forever. The shell of the debt may hang around, like this mummy, but inside the shell, the debt is dead. But just like a bad mummy movie, old, dead debt can be brought back to life. All it takes is an attempt on your part to be honorable , or an attempt by…

California Exemptions For 2015

16332750190_7d336569e5_z

When the sheriff arrives at your employer, or your bank, or your business with a levy in hand, you want to know NOW, and FOR CERTAIN,  what part of your assets are protected by an exemption under California law. Exemptions are measured in dollars:   $X of equity in a car, for example, is exempt….

Four Essential Habits For Successful Entreprenuership

entrepreneur-593362_1280

Starting out in business for yourself?  Congratulations. Small business, and businesses that were once small, form the tapestry of our economy. I’ve run my own small business for 36 years and my favorite clients in my business are other small business people. But, in the euphoria and exhaustion of starting up, don’t put off doing the…