I Filed a Tax Extension in April. Now What?

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If your finances were out of control in April, you may very well have filed a tax extension. While a tax extension doesn’t extend the time you have to pay what you owe Uncle Sam (darn!), it does give you until October 15^th to get your paperwork together and file your income taxes. Of course… October 15^th is now rapidly sneaking up!

So what the heck do you do now that the time is almost up? Well, first of all, don’t panic. There’s still time even if you haven’t given taxes a single thought since April. But make no mistake – it’s time to get moving!

Filing, Not Paying…Maybe

Remember when you filed for your tax extension back in April you still had to pay? That was because the tax extension only worked for the actual paperwork and not for the payment. However, also remember that you probably didn’t pay the actual amount you owe.

Why? Because you had to make an estimate on your payment and send that in. Now you’re going to have to figure out the real amount you owe(d). This amount may be much different than what you sent before since you may not have taken every expense or bit of income into account.

Once you figure out the real amount you owe to the IRS just send it in with your filed paperwork. If you overpaid back in April, you’ll get a refund.

Still Time to Get Organized

If you’ve barely looked at your taxes since April (or plain forgot about them), it’s definitely time to bite the bullet. Hopefully you’ve at least organized your receipts and other paperwork so you can pull it out and get started. If not, might as well start there!

Make sure you have everything you need before you start. There’s nothing more infuriating than calculating all your deductions and then discovering another box of receipts. You only want to do this once so you can get it done with!

Pro Tip: If you still need help, use your free account with Outright. Calculations are much easier when we do it for you!

After you figure out exactly what you owe, go ahead and file. The IRS suggests using efile, their online payment system. If you’re filing via snail mail, make sure it’s postmarked by midnight on October 15^th! If not, you may incur penalties and fees.

If you need more tax help, make sure to come on over to our Customer Care Center and ask away!

This post is brought to you by Outright.com, the easiest way to manage your small business finances online.

What to Do if You Catch a Tax Mistake

There’s probably no worse feeling than realizing you made a huge goof. And when that error is on your taxes? Forget about it – sheer panic. You already sent in your 1040 and Schedule C to the IRS, so game over. Might as well jump ship and move to Australia.

At least, that’s what you would do if you didn’t already know about the 1040X. Wait, you don’t know about it? Well, let’s fix that right now! The 1040X is one of the handiest of the tax forms as it’s practically saved thousands of people from having heart attacks for years. It’s definitely one to know about.

What Is the 1040X Form?

The 1040X, or the Amended US Individual Income Tax Return form, is a way for you to send in a corrected version of your tax filings. If you ever realized after sending in a form that you forgot to include a 1099 or include a deduction (or put in one too many!), this is the form for you.

This year, one of the big selling points of the 1040X is the existence of late 1099-K forms. Some online sellers have even gotten them only a few weeks before the deadline! This meant that they had most likely already filed and now had a completely new form to file. Luckily, the 1040X was there to save the day.

The actual form takes a little while to complete. This is mainly due to basically having to do everything twice. You have to include the information that was incorrect on your original filing, also making sure you include the corrected version of everything.

You have up to three years after the initial filing was due (for instance, for 2011 taxes you would have to file the 1040X by April 17^th, 2015), so there’s no huge rush. Take your time and get everything right the first…well, second time.

Particulars of the 1040X Form

There are a few particulars about the 1040X that are worth mentioning. For one, we mentioned taking your time to get everything right. Well, the IRS even says they recommend you wait until you get your refund or later before filing the 1040X. Why? Who knows, but it shows they’re not worried about getting your amendment instantly.

Also, there are a multitude of reasons to file an amended return. Did PayPal send a really late 1099-K? How annoying, but at least you can fix it. Just realized you could’ve deducted a portion of your mortgage and utilities because you operate your business out of a dedicated home office? That might result in a much larger refund – send in a 1040X as soon as you can.

If any of your fixes include a revised schedule such as a Schedule C to detail self-employment income and expenses, it’s a good idea to fill out a new one and send it in with the 1040X. Finally, make sure to be as detailed as you can when explaining the changes just so there’s no confusion on either end.

Money – It’s not a Dirty Word!

Wallet by LolaFalkDesigns

Last week, I was speaking to a crafter who sells on Etsy. I asked her how she manages her money. Her response may sound familiar: “Oh, yuck! I’m not a corporate type – I don’t pay attention to that stuff.”

In my job working with Etsy sellers at Outright.com, I see this happening again and again – many crafters don’t want to think or worry about money. It is scary to them and is something they avoid.

Yet, knowing where you are spending and making money in your business is critical to making a crafting business work. By keeping an eye on your finances, you can make decisions about what expenses to cut, how much to charge customers, when you can afford to invest more in your business, and what products you should be selling.

It doesn’t have to be scary and it doesn’t have to be avoided. In fact, paying attention to your business’ money situation can be rewarding and helpful. If you simply pay attention to two things: 1. Where is your business spending money and 2. Where is your business making money, it can mean the difference between a great business that supports your lifestyle versus needing to close down shop to take a “corporate” job. (And, who wants to do that?)

So, don’t avoid your money situation – take a small amount of time each week to take a quick look how you are doing financially. Your business will thank you.

About the Author:
Laura Messerschmitt is the Vice President of Marketing at Outright, a free online accounting software for small businesses. She loves helping the self-employed and small businesses to be more successful and grow their businesses.