2007 Taxes Filed (Sorta)
Tip It!When I wrote the other about how to file an income tax extension, it was more than an academic exercise. I was actually thinking about the possibility of filing an extension ourselves. I actually figured everything out quite awhile ago, but our return ended up being a bit more complex than expected in that we ended up getting snagged by the AMT.
The additional tax hit wasn’t too bad, but I’m still thinking about seeking a second opinion to look things over. In order to buy some extra time, I decided that to submit what was due along with IRS Form 4868. The only real downside to doing this is that filing an extension has the potential to delay your tax rebate payment. This is a non-issue for us, so I went ahead with the extension.
On the state side, we’re actually due a refund, so there’s no real need to file an extension (but check your own local laws). While this would otherwise delay our tax refund, we’re apply our overpayment to our estimated taxes. Thus, there’s no harm in delaying, and it will allow us to make sure we have our federal taxes right before filing our state return.
What next? Well, we now have until October 15th to file the actual returns. In the worst case scenario, we’ll simply file our returns with no additional payment since we’ve already submitted the amount that we think we owe. But it’s possible that we’ll get a bit of a surprise if we can figure out how to further reduce our tax burden. If nothing else, filing a paper return and requesting an extension are both supposed to reduce your risk of an income tax audit.
Published on April 15th, 2008 - 12 Comments
Filed under: Taxes
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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April 15th, 2008 at 10:22 am
Using a tax professional is a deductible expense — and well worth it in my experience.
April 15th, 2008 at 10:30 am
Yeah, I don’t mind the idea of using a tax pro, but I still like doing things myself at least as a dry run because it gives me a much better feel for our finances.
April 15th, 2008 at 12:40 pm
Do you think they will ever fix the AMT? Sucks… sorry to hear you got snagged.
April 15th, 2008 at 1:06 pm
AMT does suck. Welcome to the upper-middle class, Nickel!
Having a pro do me and SomeGal’s costs a little over $300. Ours is a little higher due to multiple income sources for both of us. It’s absolutely worth it, though. Our CPA gives us analysis sheets comparing current year to previous, and breaking down income sources (earned, cap gain, dividend, etc), and expenses as well. Of course almost all of this can be generated through Quicken, too. We also go through our actual 1040 and other forms in detail. I can’t imagine doing my own ever again!
April 15th, 2008 at 11:27 pm
I have a close family member who’s a tax professional and that person told me that using TurboTax is usually just fine for most people. I’ve heard bad stuff about H&R Block so I would think that if you are going to hire a professional then it should really be a professional and not somebody who’s getting paid just over minimum wage…
April 15th, 2008 at 11:35 pm
AMT… congrats and sorry both come to mind!
I’m surprised you can file your state return without having the federal completed. That wouldn’t fly here since our state uses the numbers from the federal to get started.
April 16th, 2008 at 7:55 am
MDP: Sorry for the confusion. We didn’t file our state return yet, but we also didn’t have to file an extension since we don’t owe anything.
April 16th, 2008 at 10:47 am
Nickel –
You’re right — using a pro doesn’t mean you can forget about the tax code — you still need to know what it says to help your tax person help you.
April 16th, 2008 at 10:25 pm
Now I’m even more intrigued. You don’t have to file an extension if you are going to turn it in late? My state would never go for that! Even if we didn’t owe money…
April 16th, 2008 at 10:48 pm
Madison, if you don’t owe anything, then what are the repercussions for filing late? Any penalties are typically based on the amount you failed to pay on time. Since we don’t owe anything, there’s no penalty. Moreover, Turbo Tax didn’t even give us the option of filing an extension since we didn’t owe. We’re just supposed to attach a copy of our federal extension to the front of our state return when we file it.
For what it’s worth, this is how it works for federal taxes, too. Since the penalties are based on late payment, you don’t actually get into trouble for filing late if you don’t owe. Of course, if you’re due a refund, there’s no sense in delaying.
April 16th, 2008 at 11:10 pm
Nickel- Thanks, I learned something new today! I see now, the penalty would be zero since it’s a percent of the amount you owe. I stand corrected:)
March 8th, 2011 at 8:44 pm
We keep records on Quicken, put together a report, send it to our tax man, and e-filed. We have our refund already.