A Cure for the Worst Tax Procrastination: Free Tax Extensions

Now even chronic procrastinators have no excuse for giving the IRS more money than absolutely required.

Last year, more than 10 million taxpayers applied for a tax extension on filing their returns – thus, not only sparing themselves from having to fork over a monthly 5 percent penalty for missing the IRS’ dreaded deadline, but also potentially avoiding making costly mistakes in a mad dash to comply.

“Rushing can cause last-minute filers to forget necessary paperwork and miss out on claiming key tax credits and deductions,” says Elaine Smith, master tax advisor at H&R Block, the giant tax preparation firm.

So with this year’s April 17 filing deadline looming, it’s a big deal that participating offices at H&R Block www.hrblock.com will be offering free tax-extension filing from April 1 right through to D-Day for taxpayers. An extension buys an extra six months – until October 15 – to get those returns in.

Ah, but don’t completely stop sweating just yet.

Just because you file for an automatic extension doesn’t mean the IRS calls a time-out on any taxes due. (The U.S. national debt is $15 trillion-and-counting, and the money’s got to come from somewhere.) Those who fail to pay up at the same time they submit Form 4868 face being hit with both late payment fees and interest on what’s owed.

“It’s definitely not a way to keep more of your own money in your pocket,” says Smith.

With the tax code having gotten so complex over the years, it’s easy to see why the extra six months would be needed. How many parents of special-needs children know, for instance, that the money they pay for their kid’s supplementary classes or programs is considered a deductible expense if recommended by a doctor? Or that unemployment benefits must be reported as taxable income?

That’s why it helps to consult a professional like those at H&R Block, which offers guaranteed in-person services at its retail offices nationwide as well as the only face-to-face online tax preparation through Block LiveSM.

One last thing: For those wondering why this year’s filing deadline is April 17, that’s because the normal cut-off date – April 15 – falls on a Sunday, and that Monday is Emancipation Day in the nation’s capital.

3 Tips to Help Small Businesses Save at Tax Time

While running a small business and being your own boss can be satisfying indeed, it can also be tricky come tax time. To ensure that you keep more money in your pocket than the government’s, check out the following tax tips:

1. Deduct everything. The IRS has given dozens of concessions to small business owners, but many don’t take full advantage of all that they can claim. For instance, if there’s a space in your home dedicated exclusively for business, you can deduct some of your housing costs. For a 2013 return, you can claim $5 per sq. ft. of your office up to 300 sq. ft. Additionally, you can also deduct monthly Internet charges, electricity, gas and phone (cell or land line) expenses.

Mileage is often another overlooked expense. You can deduct the miles you drive for business, such as client meetings or picking up supplies. Every trip counts, even the short ones, so it pays to keep track of your mileage. Small businesses are allotted 56 cents for each mile travelled.

Other deductions you might be eligible for as a small business owner include travel expenses like tolls and parking, 50 percent of meals with clients, as well as supplies, and furniture for your office.

2. Use the right business structure. There are various ways to structure a small business, and how you do so will dictate how much or how little you pay in taxes. Most small businesses choose to operate as a sole proprietor, limited liability company, or corporation. A tax specialist or accountant can advise you as to which structure is best for your business, but as a rule of thumb, if your business generates more than $50,000 in profit, you save taxes by incorporating.

3. File on time. Many small business owners end up paying more than is necessary because they file late, resulting in the IRS charging interest, late fees, and penalty fees. Missing deadlines in any circumstance is inexcusable (be it for a customer or a government agency) and is likely due to an owner being disorganized and more focused on their customers than their books.

To this end, many owners are using technology to their advantage and using cloud-based systems like FreshBooks (www.freshbooks.com), which makes it easy to stay on top of accounting tasks like invoicing and expense tracking. Such systems also allow the owner to send their accountant all the reports and information they need with the click of a mouse.