Tax filing deadline still has requirements

It is as standard as Independence Day being on July 4 and Christmas Day being Dec. 25. The deadline for filing income tax returns is always April 15, except this year.

Friday’s filing deadline for 2010 tax returns has been extended to April 18. The reason for the change is that on April 15, Emancipation Day is observed in Washington, D.C. In turn, law extends all tax-filing deadlines to the next business day. That means last minute filers have an extra weekend this year to get their W4s, 1099s, Schedule Cs and all those other forms completed an in the mail or electronically filed by midnight Monday.

“The benefit is that everyone has an extra weekend,” said tax specialist Harry Picou from his office in Houma. “That’s a downside for some that work in the [tax preparation] industry because we assumed our year ended on Friday the 15th.”

Picou said his company, like many others across the nation, would be working late to make sure every dollar earned by their clients is tabulated and that every possible deduction is claimed.

“There are a lot of new credits this year,” Picou said. “Of course, itemized deductions, they should have receipts for all that [so they can] make sure they get everything they are entitled to.”

IRS spokeswoman Dee Stepter said from her office in New Orleans said that last minute filling means it is that much more important that taxpayers make sure they have all the necessary documents available and completed so returns do not get kicked back out of the system.

“Electronic filing is going to be the fastest way to file a return and get a refund,” Stepter said.

The IRS representative said that for those who owe money, they might either pay by check or have a payment withdrawn from their checking accounts automatically when filing online.

“Even if you owe you can still file a return electronically,” Stepter said. “You can schedule a payment to be withdrawn [from your checking account] on April 18. If they need to set up an installment agreement, if they have a balance and are unable to pay, they can request one using Form 9465. [Even if] they are unable to pay they still should file the return on time, because by filing late they are going to have late filing penalties that will increase what they owe.”

Stepter said that if a taxpayer owing money does not submit a payment with the return, that person will receive a payment due notification from the IRS. “They can call the number [on the bill or] come to our office … [and] request an installment agreement,” she said.

Late filing penalties for federal tax returns, that have not had an extension request made, can be significant. According to the IRS, a late fee on $1,000 owed could be as much as $250 before additional charges are applied.

For those needing to secure a tax filing extension, they are required to complete Form 4868. Extensions are generally accepted without payment as long as the math is done properly. An approved extension gives the taxpayer until Oct. 17, 2011 to file a return. However, it does not extend the deadline for paying taxes due.

Tax preparation specialists and the IRS agree that those who owe taxes are best to pay what they can by Monday’s deadline, then make payment arrangements for the balance due.

There is a three-year window to claim a tax refund. But that means a tax return for 2007 also needs to be completed and filed by Monday. There is no penalty for filing a tax refund return late, but late filings of returns for 2008 and 2009 could place the 2007 refund on hold.

Taxpayers with a 2010 household income of less than $48,362 might be eligible for an earned income tax credit. This can result in the filer receiving as much as $5,666 even if little to no taxes are actually paid to the IRS by way of withholdings or quarterly estimates.

For Louisiana residents, Picou said that the state is allowing a continued tax credit, but you have to know to ask about it.

In December 2006, the Louisiana legislature introduced Revised Statute 47:6025, which allowed for tax credits for state residents impacted by Hurricane Katrina in August 2005. Not long after enacting the law, Picou said it was argued to be unconstitutional because the credit came from an increase in homeowner insurance rates through the Louisiana Citizens Property Insurance Corp, but further deliberation offered a refund to homeowners who had already paid into the insurance for claims.

“The money has been in escrow for years,” Picou said. “They have assessed homeowner’s [policies] whether you are a Louisiana citizen or not, you paid a percentage of your [insurance] premium to make up for those [storm related] losses. The legislature is looking at that money in advance and if people don’t claim it [they will].”

Like every other aspect of filing a tax return, claiming this credit and getting it filed must al be done by Monday. But it is up to the taxpayer to ask about it.

“We will work all weekend when normally we wouldn’t,” Picou said. “For the average individual [the extended deadline] means they get two or three days more interest on the money they have to send Uncle Sam.”

Stepter said that while most taxpayers that wait until the last minutes to file owe on their returns, there is a large number who are entitled to refunds that for some reason or another wait as well and risk having money owed them reduced due to late fees and fines.

“Because it is a holiday in Washington, D.C., the IRS, instead of just letting those in Washington extend [the filing deadline] to the 18th is being an equal opportunity robber, I guess you can say, they decoded to let everyone wait until the 18th,” Picou said.

The tax day deadline might be 36 hours later than usual this year, but the result is the same, separating its distinction from other typically standard days of notoriety on the calendar.

Certified Public Accountant Bryan McElroy offers tax instruction to Heather Martin. McElroy said that unless late filers already have an established relationship with a CPA or tax professional they might be wise to file for an extension beyond the three extra days already being offered by the Internal Revenue Service. MIKE NIXON