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A Brief History of Tax Day

This year the IRS filing deadline does not fall on its normal gloomy day

April 15 is a day that will live in infamy. In 1865, it was the day that Abraham Lincoln died, after being shot in the head by John Wilkes Booth in Ford’s Theater the night before, less than a week after Robert E. Lee surrendered to Ulysses S. Grant at Appomattox Court House. And it was in the early morning hours of April 15, 1912 that the Titanic sunk two and a half hours after striking an iceberg, killing 1,517 and separating Jack and Rose only a few hours after they had discovered their one true love.

In America, April 15 has the further distinction of being Tax Day (at least most years). Why is this exactly? Is it because the government wanted to make sure the federal tax due date fell on an appropriately somber day? Or was it just an arbitrary decision made by a government that consistently fails to apply reasoning or foresight to its actions?

The latter, unfortunately. This is America, after all. When income tax was first introduced to America – aside from a brief cameo during the Civil War, which interestingly appears several times in our tale – the 16th Amendment adopted in 1913 designated March 1 as the day that income taxes would be due. Then when Congress passed the Revenue Act of 1918, it pushed the date back two weeks to March 15. The date changed again in 1955 when Congress made revisions to the tax code and decided to make the deadline a whole month later on April 15.

Why, you may ask. Well the government has been coy about supplying a concrete answer but the IRS has stated that it wanted to spread out tax season to make it easier to process the ever increasing number of returns flowing into the agency. It has also been suggested that the government pushed the date back so that it could hold on to refund money longer. Continue reading “A Brief History of Tax Day”

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IRS Form 4868 – How to File a Tax Extension

To get an IRS extension, file Form 4868 before Tuesday, April 17

We’re down to the last week of the tax season, and if you’re not scrambling to finish your return, you’re probably wondering, “How do I get a tax extension?”

The answer is IRS Form 4868 [Application for Automatic Extension of Time to File U.S. Individual Income Tax Return]. File it by April 17 and you can get an extra six months to do your return.

You can file Form 4868 electronically. There’s no need to go through the hassle of printing it out and mailing it in to the IRS.

Plus, you can take comfort knowing that you will receive an electronic acknowledgement as soon as you e-file the form. You won’t have to deal with the stress of waiting to find out whether your request for an extension was accepted – and then scramble to get your return done if it wasn’t.

When you e-file your extension, or your actual return for that matter, be sure to have a copy of your 2010 tax return on hand. You’ll need some information, specifically your 2010 AGI, in order to verify your identity. Continue reading “IRS Form 4868 – How to File a Tax Extension”

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How to Report Capital Gains with the New IRS Form 8949

In the biggest 2011 tax change, the IRS adds a new capital gains form to fill out along with Schedule D

Starting with 2011 taxes the IRS has all new rules for reporting capital gains, complete with a new Form 8949 [Sales and Other Dispositions of Capital Assets]. Basically you have to list on Form 8949 all the transactions that would previously have been reported on Schedule D [Capital Gains and Losses] or the now defunct Schedule D-1 [Continuation Sheet for Schedule D].

You may be surprised to learn the number of things that are considered capital assets – in fact almost all of your personal and investment property qualifies as a capital asset including your home, household furnishings, stocks, and bonds.

When you sell these assets, the difference between the price you bought them at and the price you sell them for is a capital gain (or loss).

All your income from capital gains you have to report – that’s where Form 8949 comes in. Continue reading “How to Report Capital Gains with the New IRS Form 8949”