Tax Update, 10/8/13: One week left! What to do if the K-1 never comes. And: money for Harold Hill!

October 8th, 2013 by Joe Kristan

20130311-1Extended 1040s are due one week from today.  There is no second extension available.

I know, the timing might not be good.  But if it hasn’t been good enough to get your tax information together since January, it will probably never be good.   If you don’t scrape up every loss at the slots or every item you dropped off at Goodwill, it doesn’t matter.

You probably aren’t waiting on K-1s anymore.  Tax returns for partnerships, S corporations and Trusts with income reportable on 1040s  were due September 16.  You should have all of your information in hand, and it’s just a matter of spending an hour or two getting it together and to your waiting preparer.  If you are still “working on it,” you’re either overdoing it or not really working on it.

If you don’t have all of your information — if, for example, you are still missing a K-1 — get ready to file as best you can without it.  If it’s a small K-1, you probably can just ignore it.  If it’s a big one, then talk to your preparer.  If it will only generate a passive loss that you can’t use, just go ahead and file without it by October 15, as it won’t affect the amount of your 2012 tax.  If you believe the K-1 will show taxable income when it is finally released, you should talk it over with your preparer.  Use any information you have to take a shot at what the tax will be.

Big or small, income or loss, be sure to file Form 8082 with your return to tell the IRS that you are filing using numbers that aren’t on a K-1.  It helps protect you from penalties.

In any case, don’t ignore the K-1, or pretend it will be zero when you know better.  That doesn’t work.  File by the extended due date.  You’ll get much better results by filing on time and amending if necessary than by filing late.  The penalties for late payment if you owe on an amended return — if any — won’t exceed 1/2% of the underpayment per month.  The penalties on a late-filed return run to 5% per month.

 

hh44.jpg

Harold Hill gets a check.  The Iowa Film Tax Credit is repealed, but it is still stimulating the economy for Iowa attorneys and small-time filmmakers.  The Des Moines Register reports that the state has agreed to pay $225,000 to a Rhode Island man miffed that Iowa stopped the film credit gravy train:

The settlement is with financers of the movie “2001 Maniacs: Field of Screams,” which is available on Netflix.

The settlement will partially resolve a lawsuit brought by Anthony Gudas of Providence, R.I., who said his company, Tax Credit Finance, invested money in four film projects based on contracts with the state where tax credits were never paid.

The lawsuit for the three other film projects continues.

The film credit program caused a brief frenzy of production activity before it collapsed following revelations of taxpayer funds buying luxury cars for filmmakers.  A state audit showed that about 80% of the $36 million in credits issued by the program were improper and that oversight was almost non-existent.  Seven film figures ultimately copped pleas or were convicted at trial for cheating on the program, with two filmmakers earning 10-year prison terms.

And the three remaining lawsuits?  From the Register story:

Deputy Attorney General Jeffrey Thompson in December said for three of the films, producers had not submitted documentation the state needed for the projects to qualify for the credits.  And, in the fourth, state officials said the producer, Harel Goldstein of California, had created false invoices. Goldstein later pled guilty to felony fraud and forgery charges in connection to the invoices.

So the program was looted; “But some benefits can’t just be measured on a dollar-for-dollar basis.” Don’t you wish we were giving more money to Hollywood?

 

Grover’s coming to town.   Tax opponent Grover Norquist to speak in Iowa Wednesday.  (Des Moines Register). I won’t be able to attend, but it should be interesting.

 

Wikipedia image courtesy Tallent Show under Creative Commons license

Wikipedia image courtesy Tallent Show under Creative Commons license

TaxGrrrl, The View From The Trenches: What The Shutdown Has Meant So Far For Taxpayers:

My advice to taxpayers: pretend things are normal. Yes, that feels nearly impossible. But to the extent possible, file as usual and make payments as usual. But don’t get too complacent: all of those meetings, calls and audits will be rescheduled eventually: it’s a delay, not a complete reprieve.

Sound advice.

William Perez, IRS Shut Down, Week 2

 

Jason Dinesen, Glossary of Tax Terms: Medical Dependent 

 

Kay Bell, Tax Carnival #121: TaxtoberFest 2013.  Looks delicious!

 

20131003-1Andrew Lundeen,  Obamacare Raises Marginal Tax Rates above 50 Percent.  Not just for “the rich,” either.

Megan McArdle,  Republicans Didn’t Sabotage Health Exchanges, Obama Did.  ”In short, the administration passed a law with an unrealistically aggressive implementation schedule. And because of the way it passed it, it had no way to finesse that deadline.”  But it would be horrible blackmail for Congress to delay it for a year.

 

 

 

Clint Stretch, Tax Reform Is on Furlough (Tax Analysts Blog).   ”As long as Congress is fighting over a continuing resolution and the debt limit, there is no oxygen in the room for other initiatives. Members will be stuck on their talking points, and constituents won’t be thinking about tax reform.”

Robert W. Wood, Bitcoin Is Biggest Loser In Silk Road Meltdown—IRS Wins Big

TaxProf, The IRS Scandal, Day 152

Jeremy Scott, It Isn’t Time to Bury the Income Tax Just Yet (Tax Analysts Blog)

Tax Justice Blog,  State News Quick Hits: Brownback Under Fire, and More

 

The Critical Question: Should Small Business Have Veto Power Over Corporate Tax Reform? (Martin Sullivan, Tax Analysts Blog)

Robert D. Flach has his Tuesday Buzz on!

 

Note: There will be no Tax Roundup tomorrow.  See you Thursday!

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