NEW YORK (MainStreet) — Despite the irresponsibility of Congress by once again waiting until the last minute to extend the “tax extenders,” the Internal Revenue Service has announced that it began accepting and processing 2014 electronic and paper filed tax returns on January 20.
That doesn’t mean you should rush out and have your returns prepared. Don’t be in such a hurry. At the very least you must wait until you have received all your W-2s for the year. It is impossible to prepare a tax return using only your final paystub!
Do not schedule your appointment with your tax preparer, or attempt to prepare your own returns, until you have received all the forms and information needed to properly complete the returns! That means every W-2, every 1099, every 1098, and every K-1.
If you have a brokerage account there is an excellent chance that you will receive at least one, if not two, corrected “Consolidated 1099 Statements” to report revised taxable dividends, interest, and gross proceeds after the initial statement arrives in late January. The final corrected 1099 may not arrive until mid-March.
But also don’t be a “last minute Charlie.”
Many taxpayers who expect to owe Uncle Sam will wait until April to get their information together to prepare their returns. However, even if you think you will owe taxes you should have the return prepared early, once you have all the necessary information in hand.
You don’t have to actually file the returns and pay the tax until April 15. But by having your 1040 and state return prepared early you will know exactly how much you owe and have over a month to come up with the money, instead of running around trying to juggle funds days before the deadline. Hey, you might even be surprised to find that you will be getting a refund.
You must also consider the workload of your tax preparer. Many tax professionals, myself included, have a strict deadline for accepting returns to be filed on time, and several will charge a higher fee for returns received late in the season.
--Robert D. Flach for MainStreet