Tax Facts

As we head toward April 15 and the official “end” of the tax season, I would like to address a few things for many of you to be aware of as we end the 2013 filing season and get knee deep into the 2014 tax year.

• The automatic six-month extension to file. For those of us on this side of the tax preparation desk, we know well the ease and simplicity it is to file a Form 4868 Automatic Extension of Time to File. No reasons, no excuses, no questions asked. It is your right as an American citizen to file for this automatic extension to Oct. 15 to file your 2013 1040 tax return. Further, you automatically get the Wisconsin extension with the timely filing of the Federal 4868. However, you are not allowed an extension to pay any tax due. Failure to pay these taxes due by April 15 will result in both a failure to file penalty of five percent per month and failure to pay interest of .5 percent per month. If you expect a refund, you will have to wait until after the return is filed in order to get that cash.

So consider this. If you are beginning to stress about getting that tax return filed, take a minute today to find this form online, print it, sign it, and keep a copy. Then take your time to prepare your return. If you miss the April 15 deadline, so what? You are covered with the IRS.

• 2014 issues to be aware of:

Let’s start with the Affordable Care Act, or Obamacare. Everyone in this country must now have health insurance. Seniors on Medicare are covered. Employees with an employer plan are covered. Otherwise, everyone else needs to own health insurance or pay a tax penalty. As all my clients have learned this tax season, the 2014 1040 tax return will include insurance coverage reporting. The IRS is the official police agent for the health care law, so avoiding the law will be problematic for those who try.

The other issue is under-withholding. I have seen many clients these last few weeks who “owe” taxes and must pay in. Often this is due to having three or four part time jobs with small overall earnings, but accumulating to a decent overall sum. Consider having extra withholding at one of your jobs to help pay the tax bite these collectively may cause you a year from now. Start withholding sooner rather than later, and you will appreciate the refund next winter.

• Not rich (or rich enough). Over the years I have had the pleasure to work with all sorts of wealthy and truly poor taxpayers. All have one thing in common: they mostly are unhappy with their financial condition and their respective tax bite. Yes, the more affluent often worry that they do not have enough for the long haul. The low-income people, who truly do not have enough, often complain of their plight. In the middle is the tax guy who must find a diamond in the rough for each of their tax returns in order to save them some tax dollars.

My point? Living in 2014 should be a pleasure and one to be enjoyed. Do not let your tax worries keep you from enjoying the bigger and better things of life. Try to make the best of whatever hand you have been dealt. If you are reading this article, you are obviously in a beautiful part of our country with a lot of great surroundings to be thankful for. Enjoy it.

Rick Gaumer has taught college-level accounting and income tax subjects for UWGB, UWM and Lakeland College for many years and is an expert on getting students prepared for the CPA exam. Gaumer now works as a tax consultant for the Leuthner Tax Office, an H&R Block affiliate located in Sturgeon Bay.