Tax Day is April 15, but there are still many of us that have not yet filed. With less than a week left to file, some Americans are stressing to get their returns taken care of, and IPX1031’s 5th annual Tax Procrastinators report shared that there are more of us who are underprepared to meet the deadline than we probably think.
The report found 1 in 4 Americans don’t feel equipped to file their taxes this year and 29% admit to procrastinating; what’s more 28% still don’t know when the tax filing deadline is this year despite it landing on April 15.
Fortunately, tax strategist and founder of Say Yes To Profits Octavia Conner sat down with ESSENCE to outline what we need to know about tax day this year.
What are some things that have changed since last year?
“One of the items that’s major this year is the Corporate Transparency Act, where all registered businesses in the United States have to register their beneficial ownership information {with a BOI form}, and they have to make sure they file the proper documentation,” Conner. “If the business was formed before January 1 of last year, they have until January 1st of 2025. But if they formed the business after January first of this year, they literally have 30 days from the time in which they’ve registered the business to complete the beneficial ownership information. Congress passed this in 2021, but they made it required this year.”
Filing the BOI form is free of charge but failing to report your business can result in a $500-per-day fine, up to $10,000, and up to two years in prison.
What do I do if I miss the deadline and need to file an extension?
“If you have to file an extension, first, you want to make sure it’s done on or before the April 15 deadline,” Conner says.
A tax extension is a request for six months more to file your federal income tax return with the IRS. This year, a tax extension that’s filed by April 15 shift your filing deadline to Oct. 15. The proper document, Form 4868, can be filed through IRS Free File. But make sure it’s done ON TIME.
“I can’t express how many business owners I’ve seen that will file the extension and miss the proper date, making it even harder on themselves in the long run. For example, they’ll get the extension and still don’t file by the October deadline and open thmselves up to even more interest and penalties.”
What are some questions I should ask my tax preparer?
“A few questions I would pose to them is are you experienced with filing my type of tax return? Have you done that in the past? Because there’s a difference in the category of returns that need to be filed,” Conner says. “A lot of information in the marketplace is incorrect. If you are an LLC versus an S Corp versus a C Corp versus just a general taxpayer, these misfilings can get you in trouble if not careful.”
A few other questions Conner suggests to ask is:
- What is your turnaround?
- What is your process? If the process is, well, I’m just going to give you my tax documents and you’re going to file return, that’s not a good process.
- Are we going to review the return?
- Am I about to ask you questions about the return after it’s filed?
- Can you show me what you’ve done and explain the numbers to me?
- Can you explain the 1040 form?
“It’s imperative that you have trust in your tax preparer’s abilities because lots of changes have happened, and you don’t want to land yourself in hot water by being misinformed.”
Is my tax refund going to be the same as last year?
Short answer? Yes and no.
CBS reports that the IRS said it’s issuing bigger tax refunds compared with a year earlier. As of February 16, the average tax refund is $3,207, the IRS said in its latest tax season update. That’s 2.1% higher than the same period a year ago. But Conner warns that you should still be prepared for your return to possibly be lower than you expect.
“The tax returns have changed significantly,” Conner says. “A lot of people who over the years have received refunds, they’re either, one, not receiving the refund or two, the refund is much lower. And that is because a lot of the tax rules and regulations have changed. Tax brackets have been reassigned, and while it’s a little similar to last year, there are significant differences in the deductions and the credits people are allowed to claim, which affects how much they get back.”
Overall, Conner says it’s important to stay informed.
“Check out the IRS.gov site to ensure you’re in compliance because things are always changing, and you don’t want to get caught lacking.”