Solace for the Non-filer

Has it been awhile since you filed a tax return? Feeling guilty? Scared? Don’t know what to do? Do you even need to file?

Many people become non-filers each year for a number of reasons. They lose the paperwork, they couldn’t pay, or they forgot about it. Sometimes illness, family crisis or depression plays a role. The list goes on and on.  

If you are a non-filer, don’t procrastinate any longer. You may be hoping the IRS has forgotten about you, but that rarely happens. In truth, the longer you wait, the more costly it will be if you owe money. And if you are due a refund, the statute of limitations on that refund expires three years from the date the return should have been filed. Don’t risk losing your money.

It’s not uncommon to feel overwhelmed when you haven’t filed for a while, but don’t despair. Lost paperwork can be reconstructed. If you owe, it’s better to file and negotiate an installment agreement because this will stop the late filing penalties although interest will continue until the tax bill is paid. Sometimes, penalties can be abated if the circumstances are serious, such as family crisis, illness or other catastrophic situations.

Contact a tax professional to help you get the monkey off your back. An enrolled agent (EA) is licensed by the Treasury Department to represent clients who have problems with tax filing and with the IRS. EAs must pass a rigorous three-part exam to act on a client’s behalf and can help to get taxes filed, negotiate an installment agreement for those who can’t pay in full or, possibly, negotiate an offer in compromise to reduce taxes, penalties and interest. Don’t wait for the IRS to come looking for you; it’s far better to voluntarily come forward.

Every U.S. citizen and resident is required to pay his or her fair share of taxes. No more, no less. The IRS has a matching program whereby all 1099s, W-2s, etc., are entered in their computers. They match this information with the tax returns that have been filed to ensure that all income has been reported and that everyone who is legally required to do so has filed a return. So, if you haven’t filed for whatever reason, get moving before the IRS comes looking for you!

 

Driving down your tax liability

One of the most overlooked deductions in terms of amount is mileage driven.  Most people will easily remember (or be able to look at a calendar) and reconstruct miles driven to client locations, seminars or business trips.  However, many people ignore the small trips such as to the post office, office supply store or even a visit to your friendly tax specialist for a consultation.  A good example would be someone who has a post office box and visits it five times a week.  If the post office is 5 miles away (10 miles round trip) then over the course of a year, you would put in 2,600 miles which would equate to a $1,469 deduction (based on the 2013 IRS mileage rates).

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The hard part for many people is remembering to actually track the mileage on a consistent basis to not miss out on any deductions.  Fortunately, in today's technological world, there are some easy solutions for that.  For instance, you can download a mileage application for your tablet or smartphone.  Most of these applications have features that will allow you to export your log into an excel file to make it easy to access or print out.  If you don't like using applications or don't have access to one, you can still use the old method of writing the date, beginning odometer reading, ending odometer reading and the business purpose for the miles.

So, the next time you get in the car to take a short trip, open your mileage application or pull out your log book and keep track of every business mile you drive.  It will make tax time much easier for you and your accountant!​