1) Don’t panic. The returns are due on April 17th this year. This is due to April 15th falling on the weekend and April 16th being a holiday in Washington DC. If you can’t get your return completed and filed on time, file an extension. The federal form is 4868 and the Connecticut form is CT-1040-EXT. This will allow you until October 15th to file. The extension however only extends the time to file, it does not extend the time to pay. Any tax due needs to be paid with the filing of the extension.
2) Check the returns for completeness. Most returns today are prepared using a computer which handles all of the calculations, which is fine. What you need to review however is whether all of the income and deductions are declared.
3) Fund your IRA or Roth IRA. These can be funded up to April 17, 2012 for the 2011 returns. Both of these retirement vehicles are awesome and appear to be underutilizied by many taxpayers.
4) If you are married, see if married filing separate returns makes sense. You will have to run the numbers to see if this is appropriate.
5) Carefully review any offshore accounts or investments. First review the questions at the bottom of Schedule B, Interest and Ordinary Dividends. You may be required to file Form TD F 90-22.1, Report of Foreign Bank Account and Financial Accounts. Additionally, you may have a new filing requirement this year. Form 8938, Statement of Specified Foreign Assets may also need to be filed. Failure to file these forms will result in huge penalties.
6) Carefully review the use tax. Connecticut retailers charge and collect the Connecticut sales tax. If however, you purchase goods and services for which a sales tax was due but not charged, you will owe a use tax. This tax is self-assessed, which means you will need to calculate and disclose this tax. These transactions tend to be purchases that were made either online or through a catalog for which a tax may be due.
7) Start planning for 2012. Now that 2011 is in the books, it’s time to start planning for 2012. Paying estimated taxes, adjusting withholding, or increasing your contribution to your 401(k) plan are just some of the items to review. The time to get on these is now before too much of the year goes by.
ACTION ITEM: Connecticut taxpayers should take these seven steps before filing their income tax return.
Thomas F. Scanlon, CPA, CFP®
Tom Scanlon has over thirty years experience in public accounting with an extensive background in the areas of financial, tax, and estate planning. He prides himself on providing in-depth and customized solutions to privately held businesses and their owners. He is a Certified Public Accountant and Certified Financial Planner®. Tom is a frequent speaker for area organizations and has recently been quoted on CNBC, Fox 61 News and AARP's blog. Tom also has been a guest columnist for numerous publications including The Wall Street Journal, Barron's, Money Magazine, The Hartford Courant, The Hartford Business Journal, and The New Haven Register. He is a member of the American Institute of Certified Public Accountants, the Connecticut Society of Certified Public Accountants, and the Financial Planning Association. Active in the community, Tom supports a variety of not-for-profit organizations.
