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It’s The Last Day to File Your Taxes

…What if you missed the April 15 deadline?

Well, if you are getting a refund you don’t have to worry, you don’t even have to file an extension.

taxday2012 tax returns that are due a refund have until April 15, 2016 (October 15, 2016 with an extension) to be filed with the IRS before the statute of limitations on the refund runs out. If you don’t file by then, the U.S. Treasury simply keeps your “donation.”

If however you know you owe additional taxes, you need to file your return as soon as possible, even if you can’t pay right now.  The penalty for not filing is actually higher than the penalty for not paying.  …the longer you wait, the worse it gets.

What if you have had a terrible year and you just can’t pay your taxes?  Whatever you do don’t just forget about it and do nothing.  …as tempting as it might be.  The best thing to do if you are unable to pay your tax obligation is to 1. File your return or an extension by April 15. 2. Make a partial payment if you can. 3. Think about a payment plan.  The IRS offers an option to make monthly payments.  You still have to file and you will be required to pay late fees, interest and a set-up fee. (IRS.gov)

I know it’s a little late but if you have not filed your taxes yet, here are a few changes that you must know about:

The Payroll tax credit will still affect self-employed taxpayers. The expiration of the payroll tax credit for 2013 was big news – don’t forget that the credit was still in place for 2012. While that means nothing for employees subject to withholding, if you were self-employed you;ll receive an adjustment on your self-employment (SE) taxes. Your SE tax will be reduced by 2%; the SE tax rate of 12.4% is reduced to 10.4%.

Roth Conversions May Be Taxable. If you converted or rolled over money to a Roth IRA in 2010 and did not elect to include the entire amount in income in 2010 you may need to report half of that taxable income. Indulgent tax handling made conversions in 2010 more appealing than normal: specifically, you had a three year window to pay the taxes due. That window expires with tax year 2012.

Relief For Underwater Taxpayers. With a record numbers of us in foreclosure, Congress enacted the Mortgage Forgiveness and Debt Relief Act of 2007 to provide limited tax relief for taxpayers facing financial difficulties. Under the Act, if you qualified, and were forced into foreclosure or mortgage restructuring on a principal residence, you could exclude income of up to $2 million ($1 million for married taxpayers filing separately) on the mortgage forgiveness (the difference between the lower amount received and the higher amount owed to the mortgage company). The fiscal cliff tax deal extended that tax relief through 2013 making it possible for those of us in that situation to avoid a huge tax bill on 2012 short sales.

Increased Standard Deduction.The amount of the standard deduction increased for all taxpayers in 2012. The rates for 2012 were:

-Single: $5,950, up $150 from 2011

-Married Filing Separately: $5,950, up $150 from 2011

-Head of Household: $8,700, up $200 from 2011

-Married Taxpayers Filing Jointly and Qualifying Widow(er): $11,900, up $300 from 2011

This is good news for most of us since two out of every three taxpayers will claim the standard deduction in 2012.

Increased Personal Exemption. Likewise, the value of the personal exemptions for 2012 also went up. While exemptions were worth $3,700 in 2011, they increased to $3,800 for 2012.

Have you hear that some people don’t have to file?  …Are you one of them?

Well not every person who received income in 2012 has to file a federal income tax return. There are a number of things that affect whether you have to file one being how much you earned – and the source of that income – as well as your filing status and your age. For most of us, this is pretty straightforward. Here’s a guide to help figure if you need to file or not, if you meet any of the criteria, you are required to file a return: graph

As always, if you have questions or need help, seek the advice of a professional. There are a lot of great resources out there. Most software packages have an interview interface that can walk you through your situation – remember those programs are only as good as your answers.

For the best results, consult with a tax professional or call the IRS.

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