Tax Tips
Last-minute tax filing questions

By Howard Abrams, PBS Tax & Bookkeeping

I have been hearing a lot about taxpayers preparing their own tax returns. Are they doing the right thing? Should I be preparing my own tax returns and save the preparation fee?

Doing your own tax return can be an extremely dangerous endeavor. It’s not the accuracy that I’m worried about (computer-generated tax returns will always add up and be accurate). It is the content that could really hurt you. And by dangerous endeavor and content hurting you, I’m referring to the ultimate result.

Other than straightforward income and deductions such as W-2 income and mortgage interest deduction, other items such as business expenses, depreciation, taxable and nontaxable interest and dividends, capital gains and per diem reimbursement plans can present problems in judgment and actuality that can cost you more tax dollars than you’ll ever pay a tax preparer.

Be extremely careful about who you have preparing your income tax returns. New companies and those with bad reputations should be avoided. When you come across a company, make sure you get referrals from clients who have used the tax preparer for many years. A decision regarding which depreciation method to use and how much to expense can cost you tax dollars for some time.

My husband and I just completed our income taxes and we show a large balance due the IRS. We do not have the money to pay for it. What do we do?

File the return on time without making a payment (or send it in with a smaller payment) or file for an extension. By doing either, you will avoid the late filing penalty of 5 percent per month up to 25 percent. If you do not pay your taxes by the tax filing deadline, you will still incur a penalty of one-half of 1 percent of your unpaid taxes for each month or part of a month after the due date, regardless of whether you have filed your tax return on time.

You can pay the balance due by credit card; however, a percentage of the payment is charged as a convenience fee plus interest on the credit card if you carry a balance. The sooner you pay the IRS, the lower the penalties.

The IRS generally will accept an installment agreement request for an individual if the total unpaid liability is $50,000 or less and the tax will be paid within six years. If $10,000 or less and you pay it off within three years, then the installment agreement is guaranteed as long as all other eligibility requirements have been met. You can set up a payment agreement online at IRS.gov, Online Payment Agreement (OPA). If you choose not to use the online payment agreements, file Form 9465 to set up an installment agreement. If the amount owed is over $50,000, you would need to also file form 433-F.

I didn’t have health insurance coverage in 2016. What can I expect?

Every person needs to have health coverage or make a payment on their federal income tax return called the “Shared Responsibility Payment.”

For tax year 2016, the penalty for not having coverage has risen to 2.5 percent of your total household adjusted gross income, or $695 per adult and $347.50 per child, to a maximum of $2,085.

You may, however, qualify for an exemption if you experienced a hardship and can provide documents to support your claim. Some examples of hardship categories are:

  • You were homeless;
  • You were evicted or facing eviction;
  • You received a shutoff notice from a utility company;
  • You recently experienced domestic violence; or
  • You experienced the death of a close family member within the last three years.

Please see the marketplace for a complete list of acceptable exemption categories, as well as documents required to support your claim of hardship. If you believe you qualify for an exemption, you can apply on the Healthcare.gov website. LL

This article has been presented by PBS Tax & Bookkeeping Service, a company which has been providing income tax and bookkeeping services to the trucking industry for over a quarter century. If you would like further information, please contact us at 800-697-5153. Visit our website at PBSTax.com.

Everyone’s financial situation is different. This article does not give and is not intended to give specific accounting and/or tax advice. Please consult with your own tax or accounting professional.

This article has been presented by PBS Tax & Bookkeeping Service, a company which has been providing income tax and bookkeeping services to the trucking industry for over a quarter century. If you would like further information, please contact us at 800-697-5153. Visit our website at www.pbstax.com.

Everyone's financial situation is different. This article does not give and is not intended to give specific accounting and/or tax advice. Please consult with your own tax or accounting professional.