Watch out for tax scams ahead of April deadline
- Author: Zachary Reyes Apr 11, 2018,
Apr 11, 2018, 17:58
The normal tax filing deadline is April 15, but this year, it falls on a Sunday.
Time is quickly running out for those Americans still procrastinating on filing their 2014 tax returns. And as cryptocurrency is written on top of blockchain technologies, which is an immutable public ledger, it's likely that tax fraud will become harder to get around in a future dominated by crypto.
The IRS urges taxpayers to review their tax return carefully and ask questions if something is not clear before they sign and file it with the IRS. If you need more than 120 days, you can set up an installment agreement. You must also include payment of the taxes you expect to owe with your extension. She said some people miss out when their tax status changes because of a life event like a new house or a baby, and in the rush to finish their taxes, they leave a big potential deduction associated with their changed tax status on the table. IRS employees at that line can help you with a payment issue, if there is one. So if you bought Bitcoin or a similar convertible virtual currency as a sole investor during the year and have held onto it (with no dividend or fork, either of which could lead to other tax complications), you probably don't have any reporting obligation.
The IRS details that earnings from digital currency transaction must be reported to them and thus resulting in tax returns.
Take the time to figure out which credits and deductions you're eligible for to reduce your tax liability and get as much back as possible.
Jeffers shares, "That penalty is 5% per month on the unpaid balance until it's paid off".
By law, anyone who prepares or assists in preparing federal tax returns for compensation must have a valid 2018 Preparer Tax Identification Number, or PTIN, before preparing any tax return. Andrea Henry, who had a dental practice, failed to pay $113,781 in income and self-employment taxes. But even if you don't have any tax liability, it could be in your best interest to file anyway.
If you own rental property, take care completing Schedule E for supplemental income and loss. And there's no one to tell you: When filing taxes online through USA websites like TurboTax or H&R Block, there isn't a checkbox that asks if you sold cryptocurrency that year.
"You submit it to your employer, not the IRS", Hockenberry said. The IRS will automatically process your extension when you pay electronically. To do this you will need your bank routing and account numbers.
Even then, taxpayers will generally first receive several letters (called "notices") from the IRS in the mail.
Forums devoted to cryptocurrency trading on the website Reddit.com draw traders seeking tips for avoiding taxes on cryptocurrency transactions. Might consider a cash advance, deposit into a checking account, and write a check to IRS for taxes owed.
That's because last year's jump in the value of Bitcoin, Ethereum and other types of digital money shook the IRS out of its indifference toward income from cryptocurrency transactions.
So by taking the extra step of filing an extension, it could keep more money in your wallet.