Tax FAQs:

FAQs for Filing Returns

Q.How does my client go about obtaining an extension if he/she can't make the April 15th deadline?
A.It is relatively easy to get the four-month extension until August if they can't get their tax return filed by April 15th. Your client must file an IRS Form 4868, Application for Automatic Extension of Time to File US Individual Income Tax Return by April 15th. Getting an extension does not give them any more time to pay if they owe the IRS. Your client should include an estimated tax payment with their request for an extension, because if they do not pay at least 90% of their taxes by the April 15th deadline, they will be hit with penalties and interest when they finally do file their return.

Q.Should my client still file by the April 15th deadline if my client doesn't have the money to pay their taxes?
A.It is definitely in their best interest to at least file by the deadline, even if they can't pay for their taxes then. The penalty for failing to file a tax return by the deadline is %5 per month of the owed taxes. However, as long as they file by the deadline, even without payment, the penalty is only ½% per month of the owed taxes. Partial payment will lessen the penalty; so if possible, include a check with their return, even if it is not for the total amount due.

Q.What happens if my client's tax return is filed late?
A.If filed late without reasonable cause, a penalty for each month the return is late may be imposed. The IRS will also charge interest on the tax they owe.

Q.Is it better to file my client's return early or should I wait until the April 15th deadline?
A.Whether to file their return early or not really depends on whether they expect to receive a refund or expect to owe money to the IRS. Generally speaking, people who are going to receive a refund usually do, and should file early while people who owe the IRS should wait until closer to the deadline to pay. Why part with their money unnecessarily early?

Q.Does a tax return have to be filed in behalf of someone who died this year?
A.As morbid as it may sound, an income tax return still has to be filed for someone who died during the year. The burden of filing the tax returns falls upon a survivor or the executor of the estate. Regardless of when the death occurs, the taxable year for the deceased is still the normal tax year. Medical deductions can be taken on expenses incurred within one year of the death on either the dead person's final return or on the estate taxes' return: not both.

Q.Can a surviving spouse still file a joint return for the year the death occurred in?
A.Yes, your client may file a joint return if they are newly widowed. They may even be able to file jointly up to 2 years after the death of a spouse if they meet certain requirements. As long as they were entitled to file a joint return the year their spouse died, their children qualify as dependents and their home is their primary residence, they have not remarried and they support their household by providing over half the cost of maintenance, they may file a joint return for two years following the death of a spouse.

Q.Does everyone need to file a tax return?
A.Almost everyone needs to file an income tax return. There are exceptions made for people who earn relatively small incomes. For single people who cannot be claimed as dependents, your client must file a tax return if they make more than $7050. For married couples filing jointly, the minimum income for filing is $12,700.

Q.Do college students need to file income tax returns?
A.Whether or not an individual student has to file an income tax return depends on whether the student is claimed as a dependent on parent's tax returns and whether the student earns income. Your client does not have to file if they are a student and their parents claim they on their tax returns and they made less than $4,300 in earned income or their unearned income combined with their earned income was less than $700.

Q.What tax forms inform my client of their income and withheld taxes for the year?
A.IRS Form W-2, Wage and Tax Statement, from their employer tells them what wages and other forms of compensation they received for the year, as well as how much money was withheld for tax purposes. If they have more than one employer, each is responsible for furnishing them with a W-2 by the end of January. One copy of their W-2 should be included with their federal return; one with their state return and one should be kept for their records.