Good reasons--and more time--to file taxes a little later

by Center for Personal Finance editors

NEW YORK (1/31/07)--If you're chomping at the bit to file your tax return in early February, pull in those reins. Filing too early this year may mean you'll have to file an amended return later (The Wall Street Journal Jan. 24).

A recent change in the tax law alters how tax-exempt interest income is reported to customers for 2006. Because financial services firms, brokerage houses and mutual fund companies are required to mail your 1099 forms by the end of January, it's expected that millions of taxpayers will receive revised 1099s in February, March or even April. Some firms, including Wachovia Securities and Morgan Stanley, already requested more time to mail out 1099s to investors. Morgan Stanley, for example, plans to mail out statements between Feb. 5 and Feb. 9.

Taxpayers are advised to delay filing 2006 returns as long as possible. But if you file your return early and then receive a revised 1099, keep these things in mind:

• You may not need to do anything if the correction is so minor that it only results in a small additional refund, particularly if you have to pay additional money to a tax preparer to figure it all out;

• If the correction is large, it may be well worth the effort to file an amended return;

• If the revised 1099 means you'll owe more tax, by all means consider amending your return before the mid-April deadline, or you'll face interest charges and possible penalties; and

• Be aware that some revised 1099s have been sent out even later than March in past years.

If you decide to wait as long as possible this year to file your tax return--particularly if you owe money to Uncle Sam--you have two extra days. April 15 falls on a Sunday in 2007, and April 16 is Emancipation Day, a legal holiday in the District of Columbia (checkpoint.riag.com Jan. 24). So taxpayers have until April 17 to file. Internal Revenue Service (IRS) offices will be open, as usual, on April 16.

And if your tax instructions say you should file by April 16, that's not correct--those instructions were approved for printing before IRS became aware of the holiday. But don't expect a two-day extension in 2008 because there won't be a conflict with Emancipation Day. Next year, the normal deadline of April 15 will apply.

Printed Thursday, December 4, 2008

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