Today’s blog, though, is actually not part of the new rules, it’s part of the undoing of the thought process that comes with the tax collection and reporting system that we have created here in the U.S. (said tongue in cheek, as I had very little to do with it. In fact, nothing at all, I don’t believe). This is the time of year where people are getting documents in the mail and the self-created mental pressure starts to build. The required documents are mailed to you and the IRS says that you have to file your return by April 15th…hardly any time!!!!!! However, they also offer you an extension, and the extension is:
B. always granted under all circumstances!
That makes the real filing deadlines not in the spring, but in the late summer and early fall of 2018. I understand that if people are getting a refund they want to get their return filed quickly and get that money back in their own pocket, but there are a great many now who are getting consolidated brokerage statements, K1s or still gathering records, knowing they’re not going to be getting a refund. Those folks just don’t even need to be part of this process, they don’t need to have any fear or angst. If I was one of them (oh yes, I am one of them, and this is what I do) I would send in enough money so I won’t owe more than $1,000 when the tax return is filed, and then file an extension, and then not worry about it until June or July. However, that is not the normal mindset. The majority of people feel an overwhelming desire to not just get the return filed by April 15th, but to rush, to push tax preparers, to call people that haven’t sent them tax documents and yell, “why haven’t I received my documents??!!”. It’s a crazy angst that the United States tax collection system has created over the years, and to their benefit, it’s one of the best marketing ploys I’ve ever seen in my career. The IRS has sold the American public on the idea that the IRS is scary, the IRS will somehow do something awful to you, the IRS is watching you. I don’t know where all of this craziness really comes from, but the truth will set you free. You don’t have to file in April. You just have to pay by April. Pay what you owe, collect the paperwork in a slow and leisurely manner, and then file your return whenever you care to later in the year. Why do I say this? Well, because people rush, they make mistakes. When people rush, they miss the deductions. When people rush, they don’t plan. I’ll give you a quick example. Thousands of people will walk into tax offices today with their documents, and in a few days’ time will get the news, yup, you owe $1,500. If the tax preparer had an extra two minutes in their day, they would have said, wait a minute. I can help these folks and they’d call the taxpayer and say, “well, if you do nothing but file as is right now you owe $1,500. However, you can fully fund a private IRA on top of your 401k at work. If you do that, you’ll actually get a refund of $700 rather than owing $1,500 in”. “Why don’t you go open an IRA at your local bank, swing by and give me the document once it’s been completed. We’re not in a hurry to file.” Does that happen? Rarely, because everyone’s in a mad rush. Pressure, pressure, pressure. Angst, angst, angst. The tax doctor’s prescription for everybody: If you’re trying to get a refund, and you need the money, by all means go go go. Get ‘er done. But for the rest of you who are likely to have to pay, spend a few minutes figuring out what you’re likely going to owe, and making sure that you get that into the IRS by April 15th. Go on extension. It’s simple. It’s free. It’s automatically granted and you stay out of the way of the herd mentality. Then do some real tax planning with somebody who can sit down and take time to help you produce an outcome that’s favorable to you.
The post Fifth Bite Tax Code Changes… Perhaps the Most Important Bite. appeared first on Tax What If Doctor.
Powered by WPeMatico