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Taxes, Taxes, Taxes…

It’s that time of year again – the April 15 deadline for filing income taxes is less than a month away.  A number of us will be doing the annual scramble to consolidate the information needed to complete the forms/input the data and generate the return(s).  And, of course, while last year’s return is a good reference, this year’s return preparation process will have some new challenges.

This year will be the first filing season that requires taxpayers to work through the new income tax provisions brought to us compliments of the Affordable Care Act.  Under the ACA, there are provisions that establish tax credits for individuals who have purchased health insurance through a marketplace, calculations performed to validate subsidy amounts (and make adjustments if appropriate) and penalty provisions for those who do not have health care coverage.

Projections to date are that the 2015 tax filing season is gearing up to be a difficult one.  The Internal Revenue Service remains available to take calls and answer basic questions but that availability is diminished from previous years.  This is thanks to an IRS with a shrinking workforce whose employees are less equipped to do their jobs.  Estimates have been generated that the IRS will only be able to actually handle between 43% – 53% of the calls it receives during tax season this year, with callers on hold for 30 minutes or more.

Various options exist for completing and filing income tax returns.  These include:

(1) submit the returns the old fashion way – in hard copy after you have completed the necessary forms;

(2) file free electronically with the IRS (this program can be accessed at the IRS’s website);

(3)  utilize online commercial tax filing services such as Turbo Tax or H&R Block Online Filing;

(4)  contact a local brick and mortar tax service and meet with its representative who will prepare your return;

(5)  utilize an enrolled agent registered with the IRS, a CPA or a tax attorney.

While there is not necessarily a right or wrong answer for how to go about the filing process, the best choice is typically a function of cost, how complicated your income situation is, how savvy you are with computers and how much time you have to devote to the task.

If you find yourself coming down to the deadline you do not need to panic – you have the option of filing an extension (IRS Form 4868) with the IRS to buy yourself additional time.  (New York State has an equivalent form.)  That extension does not, however, stop the clock on any interest or penalties owed if you have underpaid the tax due for the previous year so any extension should be accompanied by the estimated balance due.

TAGS: Tax, 2015 Tax Filing, Affordable Care Act, Income Tax, IRS, Tax Day, tax returns