THE DOG DAYS OF SUMMER ARE OVER: It’s Time to File Your Tax Return

While you may incorrectly believe the “Dog Days of Summer” (July 3 – August 11) refers to hot, lazy summer days “not fit for a dog”, it does mean it’s time to file your extended individual income tax return for last year.

For many taxpayers, the standard tax season from January to April can be a whirlwind of documents, calculations, and looming deadlines. However, the Internal Revenue Service (IRS) provides an option for those needing a little extra time: filing an extension, which extends the deadline to October 15. In this article, I’ll discuss the benefits of opting for this extension and how to effectively prepare over the summer if you're planning to use a tax return preparer for the extended deadline.

Advantages of Filing an Extension:

1. Reduced Pressure: One of the primary motivations for choosing an extension is the luxury of time. The extra six months allows for careful consideration of all financial factors, reduces the rush, and aids in ensuring a thorough and accurate return.
2. Avoiding Penalties: Missing the April deadline without filing an extension can result in hefty penalties. The IRS can charge 5% of the unpaid tax for each month or part of a month that a return is late, up to a total of 25%. By securing an extension, you stave off these potential penalties, provided you file by October 15.
3. More Time for Comprehensive Evaluation: With the complexities of ever-evolving tax codes, having more time allows you to explore all available deductions, credits, and income-adjusting opportunities.
4. Flexibility Amid Financial Changes: If the previous year saw major financial shifts—like property sales, new business ventures, or inheritances—an extension offers breathing room to handle these intricacies.
5. Time to Find the Right Tax Professional: Not all tax return preparers are the same. An extension offers the buffer to find a preparer who fits your needs and understands your specific financial landscape.

However, it's paramount to understand that an extension to file isn't an extension to pay. If you anticipate owing taxes, they are still due by April 15, and failure to pay by this date can result in interest charges.

Summer Preparation When Using a Tax Return Preparer:

Engaging a tax return preparer necessitates a different approach to preparation. Here's a summer checklist to ensure a seamless process:

1. Gather All Financial Documents: Compile all pertinent financial records. This includes W-2s, 1099s, mortgage statements, investment records, receipts for potential deductions, and other related paperwork.
2. Research and Choose a Reputable Tax Preparer: Summer provides ample time to investigate and select a competent tax preparer. Check for credentials, reviews, and ensure they have a Preparer Tax Identification Number (PTIN) which is required by the IRS for those who prepare tax returns for compensation.
3. Schedule an Initial Meeting: Engage with your chosen preparer early, discuss your financial situation, and understand what they require from you.
4. Review the Previous Year’s Return: If it's your first time with a new preparer, providing them with last year's return can offer valuable insights and serve as a foundation for the current year's filing.
5. Stay Updated on Tax Laws: While your tax preparer will be well-versed in current laws, having a basic understanding yourself ensures a more collaborative relationship. Check for any new deductions, credits, or law changes.
6. Organize Documentation: A well-organized file can reduce billable hours with a tax preparer. Create clear sections for income documents, deductions, and other relevant records.
7. Ask Questions: Use the summer months to note down any questions or concerns. Whether it's about potential deductions, tax credits, or specific financial scenarios—having them ready will make your meetings with the preparer more productive.
8. Stay Proactive: Tax preparers, especially the good ones, are in high demand as the extended deadline approaches. Ensure you provide all requested documentation in a timely manner and respond promptly to their queries.

Filing an extension for your individual income tax return has numerous advantages, not the least of which is the ability to ensure a more accurate and advantageous tax filing. By preparing diligently over the summer and partnering effectively with a tax return preparer, taxpayers can navigate the complexities of tax season with confidence and precision. As always, each individual's tax situation is unique, so always ensure that decisions are tailored to personal financial scenarios.

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