Take a deep breath, as there is still time to get them done. Not much, but there is still time.
The accountants at Diemer Accounting and Tax Services Inc. in Holland say they have seen an increase in tax returns and will end the year having completed close to 3,000 returns.
Ken Diemer has been doing tax preparation full time since 1985, and has provided a variety of tips and tools to use this year and in the future.
The first thing Diemer said to keep in mind is that, for an individual tax return that may not get filed on time, Form 4868 can be used to file an extension, which gives someone until Oct. 16 to file. But he cautions that a tax extension is only an extension to file and not an extension to pay.
“If you feel you will owe, you should send payment in with the extension,” Diemer said. “If tax is still due when you file the return, interest and penalties may be due, as well, if payment was not sent with the extension.”
And while taxes are due next week, Diemer said it is important to not rush because that is when errors are made and deductions are missed. He explained that deductions are different for everyone and things like owning rental property or a small business can change a person’s deductions drastically.
Commonly missed deductions include forgetting to deduct license plate tabs and missing the college credit. Another for small business owners and rental owners is forgetting to deduct a percentage of their cellphone bill.
“Cellphone deductions depend on the person,” Diemer said. “If a person owns multiple rentals, they could take 30 percent. Some people say they use their cellphone 80 percent for business, so we do that. The percentage changes based on how much they use the cellphone for business.”
Diemer said that missed deductions can add up quick, and this year he found an additional $2,300 in tax returns for one customer who had done their taxes themselves in the past.
If hearing that has caused an increase in heart rate, Diemer said he and his company will go back and audit up to three years to catch any mistakes that have been made and to find deductions that were missed. They provide this service year-round.
Even if your taxes are already filed for this year, Diemer explained that there are steps everyone can take to help prepare for next year and to ensure maximum returns. The key is to be proactive.
“We need to stress that people need to get out of the groove of waiting until the last minute to prepare their taxes,” Diemer said. “Sit down with a tax preparer during the year to discuss this stuff. Do not wait until after the end of the year, as many planning opportunities will be gone.”
Diemer said he has had customers tell him they sold a rental this past year but waited to let him know.
“I wish they would have called me before the end of the year because we could have done some strategies to save some income tax on that,” he said. “A lot of those strategies are gone once the year is done.”
Tax preparation has become more complicated each year, and that is a trend Diemer expects to see going forward.
“There is going to be a lot of changes coming up,” he said. “The new administration wants to redo the whole tax code. That is going to be huge. I don’t know if he will be able to get it done with all the conflict, but there are going to be changes and that is going to take tax planning to make sure you get the best out of those changes.”