Tax Prep Dispatch: Tax Triage 2019

Back by popular demand, here are suggested guidelines on how to prioritize your work during these last busy days of the filing season. This Dispatch has been updated to be suitable for the current filing season.

Merriam Webster: Triage is the sorting of patients according to the urgency of their need for care.

It’s Saturday, April 13. You have seven volunteers and a mob in the waiting room—way more than you can handle in one Saturday. Moreover, taxpayers on the last few days of the filing season tend to be a hapless bunch. They have difficult situations; for example, they may have no idea who had health insurance or when, prior year returns, stories about other people claiming their kids and tax records that look like a six-year-old’s origami project. How do you decide who to serve and in what order?

Suggested priorities, from most important to least important:

  1. 2015 return - refund
  2. Amended return to correct an error made at your tax site
  3. 2018 return - balance due
  4. 2018 extension - balance due return
  5. Amended return - balance due
  6. 2018 extension – refund return
  7. Everything else

2015 Return - Refund

If someone has an overpayment on a 2015 return, that person must file it by April 15, 2019 to get the refund. If filed later, that money is gone. IRS will not issue a refund when an original return is filed more than three years after the return due date.

Amended Return to Correct an Error Made at Your Tax Site

It happens. We owe the taxpayer the service of correcting the error as soon as possible. The error may have been related to incomplete or incorrect information from the taxpayer or maybe the preparer just goofed and quality review missed it. Whatever the cause—and it’s often impossible to tell—be sure to apologize and get it corrected as soon as possible.

2018 Return - Balance Due

When someone files late and has a balance due, a late filing penalty will be assessed. The penalty is five percent of the balance due for each month—or part of a month—that it is late, for up to five months. For example: it looks like Mary will owe $800. If she files at the end of May, she’ll owe the $800 tax plus an $80 penalty. Mary should file her return by April 15, even if she can’t pay.

2018 Extension - Balance Due

Some folks just don’t have it together yet. If a taxpayer is not ready to prepare the return and it looks like the taxpayer will owe, advise the taxpayer to file for an extension (Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return) and pay the anticipated balance due with the extension request. Both need to be done by April 15.

  • TaxSlayer users: Search for Form 4868 at the top of the menu where it says, “Enter the form number.” Once Form 4868 has been completed, the E-file section will offer the choice to file the return or file the extension.
  • TaxWise users: Check the + near the top of the tree and search for Form 4868. There is a check box at the top of Form 4868 to indicate that the extension form is being used. Basic information flows to the Form 4868 from the Main Information page and the Form 1040.

Amended Return - Balance Due

A taxpayer with a probable balance due needs to file as soon as possible to reduce interest and, perhaps, penalties.

2018 Extension - Refund Return

Yes, sometimes a taxpayer with an overpayment who is not ready to file should file for an extension. A taxpayer who has a legal filing requirement should really file the return or file for an extension by April 15. Late filing penalties are not assessed on returns with an overpayment. But if the taxpayer subsequently owes—for example, maybe IRS audits the return and discovers unreported income—then the late filing penalty would be assessed. Better safe than sorry.

Everything Else

This includes 2018 returns with no filing requirement—for example, someone who is just filing to get some withholding back, all 2016 and 2017 returns, various amended returns and all of the other flotsam and jetsam that flows through your door. This year many taxpayers have found that they didn’t have enough withheld. Urge taxpayers to check their current withholding, using the IRS withholding calculator. 

Final Notes

Many programs no longer close up shop after the April due date. If your program has summer tax preparation hours, keep that information handy during the last week of the season. Taxpayers without an urgent issue can just be invited to come later for assistance. The folks with 2017 and 2016 returns are already a year or two behind, so what’s a few more weeks?

Does the concept of triage apply to taxes? The non-medical definition of triage is: “Assigning of priority order to projects on the basis of where funds and other resources can be best used, are most needed, or are most likely to achieve success.” Sounds right on the money! Tax triage may not be life or death; that is, if you make the wrong decision, no one is going to bleed out or convulse. Nonetheless, know that you do difficult, important work and try to help the neediest taxpayers first. Good luck with the last week.

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