Usful TAX Information

Filing Tax Returns Timely Doesn’t Have to Be Stressful, Worrying, Agonizing

Reducing stress by filing income tax returns earlier. Procrastinating any matters specially collecting your annual tax information and documents by filing late is stressful to your health and creates anxiety. Managing and reducing source of stress is helpful for happier life.

The followings can help for tax-filing process to be less stressful:

• Know what documentation you need-Forms W-2, 1099s, 1098, K-1s, healthcareexpenses, charitable contributions, estimated taxes paid, childcare expenses,mortgage interest and property tax payments, tuition and student loan interestpayments, retirement plan contributions, sales of assets (stocks, properties), changingyour status
   (marrying, divorcing, having new child, new dependent )
• Plan yourself plenty of time-it is very stressful when you are rushing for collection ofinformation and preparing yourself or hiring a professional to file your tax returns.
  Option of Paying or Receiving Tax Refund-If you will owe income tax better to file ontime and plan paying the tax liabilities with installments or other arrangements.Getting extension of time only eliminates non-filing tax penalty. Failure-to-file andpay penalty is 5% of your balance due for each month in which your taxes remainunpaid, up to 25%. Filing tax returns on time prevents failure to file penalty. Balanceof tax liabilities until fully paid, will incur interest and penalty. If you are to receiverefund, filing earlier will benefit.

Statute of Limitations for Income Tax Returns

IRS Typically Has Three Years Statute of Limitations. Federal tax statute of limitations runsthree years after you file your tax return. If your tax return is due April 15, but you file early,the statute runs exactly three years after the due date, not the filing date. If you get anextension to October 15, your three years runs from then. On the other hand, if you file lateand do not have an extension, the statute runs three years following your actual (late) filingdate. Six Years for Large Understatements of Income. The statute of limitations is six years ifyour return includes a “substantial understatement of income.” Generally, this means thatyou have left off more than 25 percent of your gross income. California FTB may request information from you regarding your California income tax returnwithin the California statute of limitations period, which is usually the later of four years fromthe tax return due date or the date the tax return is filed. As a rule, you should keep your taxinformation for seven years.