Filing an Extension? Act Now.

If you need more time to file your 2013 income tax return, you can get an extension – and no explanation is necessary.

There are many reasons for wanting more time to file your 2013 individual income tax return. For instance, you might want to hold off funding a retirement plan such as a Keogh or SEP until you can save more money. Perhaps you’re waiting for a tax form from a trust, a partnership, or an S corporation.

You can usually extend filing for up to six months beyond April 15. That means you could have until October 15, 2014, to finalize your return…

Assuming you follow the rules:

  • Estimate your total tax liability for 2013, subtract what you’ve already paid in withholding or estimated payments and remit most or all of the balance, and
  • File an extension request form (generally Form 4868 for an individual return) by April 15.
    • You can file the extension request form electronically, by phone, or by mailing it to the IRS.
    • If you owe taxes, you can pay with an electronic funds transfer, your credit card, or a check.

Requesting an extension for your personal return also gives you additional time to file a gift tax return for 2013. The gift tax return extension is automatically included. You don’t even have to check a box. But if you owe gift tax (or generation skipping transfer tax), or are requesting an extension only for a gift tax return, you’ll need to use Form 8892.

NOTE: If you live and work outside the United States, you may qualify for an automatic two-month extension of time to file without having to send in a form. However, if you’re out of the country and expect to meet the requirements for foreign tax exclusions or deductions after April 15, you might need to file Form 2350.

Contact GFS for assistance on extension filing.

Home Mortgage Debt Cancelled? Special Inclusions Available

The IRS recently announced information about special exclusions for cancelled home mortgage debt. If a lender cancels or forgives money you owe, you usually have to pay tax on that amount. But when it comes to your home, an important exception to this rule may apply in 2013. Here are several key facts from the IRS:

  1. If the cancelled debt was a mortgage loan on your main home, you may be able to exclude the cancelled amount from your income. To qualify you must have used the loan to buy, build or substantially improve your main home. The loan must also be secured by your main home.
  2. If your lender cancelled part of your mortgage through a loan modification, or ‘workout,’ you may be able to exclude that amount from your income. You may also be able to exclude debt discharged as part of the Home Affordable Modification Program. The exclusion may also apply to the amount of debt cancelled in a foreclosure.
  3. The exclusion may apply to amounts cancelled on a refinanced mortgage. This applies only if you used proceeds from the refinancing to buy, build or greatly improve your main home. Proceeds used for other purposes don’t qualify. For example, a loan that you used to pay your credit card debt doesn’t qualify.
  4. Other types of cancelled debt do not qualify for this special exclusion. This includes debt cancelled on second homes, rental and business property, credit card debt or car loans.
  5. If your lender reduced or cancelled at least $600 of your mortgage debt, you should receive Form 1099-C, Cancellation of Debt, in January of the following year. This form shows the amount of cancelled debt and other information. Notify your lender if any information on the form is wrong.
  6. Report the excluded debt on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. File the completed form with your federal tax return.

For more on this topic, see Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments. You can also contact Green Financial Services for assistance.

Credit and Debit Cards Accepted by IRS

The IRS has announced that taxpayers can pay their tax bill by internet, phone, or mobile device regardless of how and what you are paying such as: E-file, paper file or paying an existing bill or notice. The IRS uses standard service providers and business/commercial card networks. The taxpayer’s information is used solely to process the payment.

There are fees associated with filing:

  • Payment will be processed by a payment processor who will charge a processing fee, which may be tax deductible. The fees vary by service provider.
  • No part of the service fee goes to the IRS.

For more information and a full list of fees associated with filing click here.