Preparing Tax Return

Picture yourself wading through the mountains of paperwork, the disarray of receipt after receipt... you are stressed, pulling out your hair and quickly going insane. Of course, it must be tax time. You never really have the time, energy or sanity to complete the meticulous paperwork involved in tax return filing - and get it done on time! But rushing through it is not an option - mistakes happen when you rush and when it comes to your tax return filing, mistakes can lead to a whole other bag of troubles. But if you submit late tax returns, there are penalties to be dealt with. You do have options; however, you just need to know what they are.

What is a Tax Return Form?

Firstly, an IRS tax return is the general name for the form used to file taxes payable to the federal or local government, which is filed with the IRS. This tax return form includes information such as your gross income, allowable deductions, tax credits and tax that is due.

As an individual taxpayer, you would file the tax return Form 1040 on a calendar-year basis. Corporations should file the tax return Form 1120 on either the calendar-year or fiscal-year basis. Also, tax returns must also be filed for partnerships using a Form 1065, estates with Form 706 and Form 709 is used for gifts you have received. The IRS, or the Internal Revenue Service, is the federal agency that is responsible for administering and enforcing the American Treasury Department's revenue laws through the assessment and collection of taxes and other related procedures.

What does Tax Return Preparation Involve?

To aid your tax return preparation, it is vitally important to collect and organize your records throughout the year. This will not only save you time and effort when preparing your tax return, but will also allow you to defend yourself much more effectively, should the IRS find something wrong in an audit.

It is important to keep record that identify sources of income, your online bank records (if your bank does not already do this automatically), keep you check stubs as a receipt for the checks, track your cost basis for property and investments, keep your bills filed and keep track of deductable items when they happen. If you are a self-employed person or a home based business owner you may already have some knowledge of the incredible tax savings which are available through tax deductions. It is important to do your research and be able to support any tax deductions you claim with appropriate documentation also.

What Happens if You File Your Tax Return Form Late?

If you should file a late tax return there are ramifications that you will have to face in most cases. If your tax return is to be filed by accountants or tax attorneys, there is an extension of the due date that can be negotiated between the IRS and the tax attorneys or accountants. If you are owed a tax refund, the IRS usually are not too concerned when you lodge your return, they seem to be happy enough to hold onto your tax refund for as long as you let them.

However, if you are calculated by the IRS to owe them money, this is when you will have to face the ramifications of your inaction. Late fines ranging from $110 to $550 will apply if you manage to file your late tax return within four months of the due date. Fines of between $550 and $2,750 will be charged to you if you have still not filed you tax return after four months. Interest is then added to the amount of outstanding tax that the IRS calculates that you owe them. The amount they calculate that you owe them will also probably be more than you would normally owe them, as they will not be dedicated to giving you tax deductions that they cannot support (as they don't have the supporting documents).

So even if you are six months late with filing your tax return, it will still be beneficial to you to lodge it. If you are found to be avoiding tax, more serious financial and legal penalty will, of course, apply.

It is very important that your tax return preparation is completed meticulously, so that you fill out your tax return forms correctly and on time. Don't give the IRS any reason to audit or penalize you!