Oh No! Will your tax return be tardy?

Tax return latenj 2.15 image kemberley.comIf you are like the rest of the 5 million individuals the IRS expects will put their tax return on extension, don’t be alarmed! Here are a few tips if you have yet to file your tax return!

Ask for an extension

If you simply don’t have the time or the effort to get your return out before midnight, consider filing an extension. The IRS offers a service via their website, Free File, which allows anyone to file for an extension or you can manually prepare your Form 4868. Both options will provide you with an additional six months to file, extending your tax return’s due date to October 15th instead. Keep in mind, filing an extension will help you avoid the failure to file penalty, which could be assessed at 5% monthly of unpaid taxes. In addition, this penalty can be assessed up to a whopping 25%!

Yes, the IRS still wants their money!

While filing an extension will give you time to file, it does not however, give you additional time to pay. If you file for an extension, you are required to pay 90% of the actual tax due. Failure to pay will expose you to the failure to pay penalty, which is approximately ½ of 1% monthly up to a 25% maximum penalty. If you can’t afford to pay the entire amount, at the very least, submit a partial payment in order to reduce penalties. In addition, consider using another payment option like an installment agreement, which would allow you to make monthly payments on the amount you expect to owe.

File past tax returns

Not only is your 2014 tax return due, but keep in mind, April 15th is the last day to claim a tax refund for the tax year 2011. The IRS allows individuals to claim a refund by filing an original tax return within 3 years of the tax deadline. Otherwise, you risk the chances of obtaining your tax refund.
Keep in mind, the IRS does not access a failure to file penalty for returns due a refund.

Remember: your choice, your future!

Kemberley Washington is a certified public accountant and professor at Dillard University.  Subscribe to her blog at kemberley.com or connect with her on Twitter @kemwashcpa.

Will you have to pay healthcare taxes?

healthcare taxesnjWhen you file your tax return this year, you will notice a big change!  This is a result of the Affordable Care Act (ACA), often referred to as Obamacare.

What is Affordable Care Act
Under this act, governments and individuals have a shared responsibility for the availability of health care insurance coverage. The Act created the Marketplace (Exchange) where taxpayers are able to find health care options and obtain help with paying premiums.

How does it impact your tax return?
The Affordable Care Act required that all individuals have health care coverage.  This year is the first year taxpayers will be required to pay a fee if they do not have health care coverage or a qualified exemption when they file their tax returns.

What’s included in health care coverage?
Everyone must have qualified health care coverage.  This includes:
·      Coverage obtained through an employer;
·      Government programs (Medicare or Medicaid); or
·      Other types of insurance (Marketplace set up by Healthcare.gov).

What qualifies for exemptions?
If you qualify for an exemption, you are not required to pay a fee on your tax return.  Exemptions include:
·      Short coverage gap (less than 3 months)
·      Citizens living abroad
·      General hardships
There are many exemptions available. Please visit irs.gov for more information.

What happens if you do not have health care coverage or qualify for an exemption?

If you do not have health care coverage or a qualified exemption you will be required to pay a shared responsibility fee. To determine whether you are required to pay a fee, utilize the Internal Revenue Service (IRS) payment calculation page.

Remember: your choice, your future! 

Kemberley Washington is a certified public accountant and professor at Dillard University.  She writes a personal finance blog and enjoys helping others get a handle with their finances.  Check out her Financial Planner to get your finances in order and under control!

3 reasons you should report “that income” on your tax return!

photo(3)Why reporting your self-employment income is more beneficial than you think!

Every person who receives income in the form of tips, cash, stipends and other types of income are faced with a tough question at tax time.

Should I include this income on my tax return?  And let me tell you, the answer is …YES! [Read more…]

Don’t believe the hype! You can’t claim these on your tax return

Being a CPA, I often get tons of calls from friends I haven’t heard from throughout the entire year. Of course, they are not calling to see how I am doing, but just want to pick my brain about how they could boost their tax refund!  Whether it is determining whether they can claim their long lost cousin or file head of household (although they are married and living with their spouse), it is important I help them sort through the “hype!”

#1 Myth – I can claim mileage traveled to/from work

Traveling to and from your regular place of employment is simply not deductible. But let’s look at what is. The Internal Revenue Service (IRS) will allow for travel back and forth for business related trips. For example, let’s say you are an attorney and you have meetings with clients throughout the day, the mileage traveled to and from these meetings are considered as deductible expenses. You have the option of taking actual cost or the standard mileage rate of .56 cents (2013) for each mile traveled.

However, if you have a second job and you traveled from your primary place of employment directly to a second job, your mileage traveled is considered a deductible expense. For example, you work at a university and also a night job at a community center. Your travel is considered a deductible expense. For more information, view IRS Publication 463.

#2 Myth – I can deduct my time donated to a nonprofit

I had to include this myth, because just this year alone, I was asked about this several times. But the IRS does not allow for a deduction for services provided to a nonprofit. For instance, if you are a chef and decide to donate your time to cook for homeless individuals at a local shelter, your time donated is not deductible. However, you may be able to deduct your mileage traveled to and from the nonprofit, payments made for food and supplies, or even amounts given to the organization.

#3 Myth – I can claim my work clothes as an deduction

This is also one of the biggest misconceptions. Many people think they are able to claim the cost of their clothing and cleaning expenses on the tax return. Now granted, in certain instances this cost may be deductible if the clothing meets two requirements. These requirements are (1) the clothes cannot be suitable for everyday wear and (2) it is a condition of employment.

However, it is not enough to say “I don’t wear these anywhere else!” It has to meet the requirements listed above to be deductible. For more information, visit Publication 529.

Remember: your choice your future! 

Kemberley Washington is a professor at Dillard University and certified public accountant.  Follow her Twitter or connect with on FaceBook.