6 steps to take after the tax deadline

July 15, 2020
5 minutes read

Phew! Your taxes are complete. You’ve filed your documents, calculated what you owe, and made the appropriate payments. Not much else to do until next year’s tax time.

Not so fast.

In fact, there are a few things you should do post-tax filing to make sure you’ve crossed all your T’s and dotted all your I’s. Take a look:

Fix any errors

If you review your tax return and notice an error, or you receive information after you file that necessitates an adjustment on your return, there are a few ways to amend it.

In the US, you’ll want to fill out the Amended U.S. Individual Income Tax Return Form 1040X after your original return has been processed. You can file this amendment for changes in filing status, income, deductions, or credits. After you’ve filed the amended return, you can check the status at the Where's My Amended Return? IRS webpage. Expect it to show up in the system as much as three weeks after you sent the return, and processing up to 16 weeks.

Canadians will also have to wait until the CRA has received the original return before filing an amendment. Once that has happened, you can file a T1-ADJ T1 Adjustment Request to amend your return. The CRA asks that you revise specific lines instead of sending in an entirely new return.

During the COVID-19 pandemic, the CRA has switched operations up a bit. Now, you can request changes online with Change My Return in My Account or ReFILE. You can do this even if you’ve already submitted a change request via mail.

Review your withholding

If there’s anything 2020 has taught us, it’s that everything can change unexpectedly—and this can impact your taxes. Even planned changes like marriage affect what you owe at tax time. If you don’t make changes to your withholding and you have a qualifying event, you could face a hefty payment or possible penalties when you file. That’s why it’s important to review your withholding and estimated payments to ensure any qualifying life-changing events will be accounted for ahead of time.

You can use the IRS’s Tax Withholding Estimator to determine these figures. If a change is needed, you can file a new Form W-4. If you have a more complex filing situation, you might need to use Publication 505.

Keep an eye on your status

It’s a good idea to be proactive in seeing whether your tax filing was accepted or rejected.

If it’s been accepted, great! Check what you owe and ensure you’re all set up to make the payments on time.

If it’s been rejected, you’ll want to investigate why and address the issue as soon as possible.

Quick links:

US

Canada

Organize your records and keep them on hand

Keeping your business organized is always a challenge but worth it in the long run. Should issues arise now or in the future, you’ll be able to easily access the exact accounting and tax records you need.

The IRS recommends keeping records for a minimum of three years in case of an audit. The CRA doubles that, advising you to keep records for at least six years.

5 quick tips for organizing your business accounting records

Review your payments

To find out what you owe, you can log in to the IRS website and view your account information. There, you can make a payment via debit or credit card with IRS Direct Pay. You can find other options at IRS.gov/payments.

In Canada, log in to your account to see the balance owed. You can make your payment online or via another method:

Pay as much as you can, as soon as you can. This will free up mental space for other business matters—as well as prevent any late fees or penalties.

If you can’t pay the entire sum in one go, it’s still important to file on time. You can always ask for an extension on the payment or consider a payment plan.

The IRS offers a long-term payment plan if you owe $50,000 or less, and a short-term payment plan (120 days or less) if you owe less than $100,000. Short-term payment plans don’t come with any setup fees, but long-term payment plans cost $31 (automatic withdrawals) or $149 (non-direct debit) to set up. Both payment plans are subject to interest and potential additional penalties.

The CRA offers payment arrangements if you can prove that you’ve attempted to pay your debt in full by cutting expenses or borrowing money. Use the Payment Arrangement Calculator and Monthly Net Income and Expense Worksheet to find out what that might look like for you.

Figure out what to do with your tax refund

If you’re getting money back at tax time, there are some wise ways to spend it so you can actually get a return on your investment.

While the options are quite literally endless, we’ve got a few ideas to get you started:

  • Reinvest in your business: Redesign your website, open a brick-and-mortar, add inventory to your warehouse, or purchase a new piece of equipment—whatever will help you grow.
  • Get rid of debt: If your business has “bad debt,” consider putting this money towards that. Try to prioritize debts with high interest rates.
  • Invest in your retirement: Contribute more to your retirement savings plan—just make sure you don’t contribute more than allowed.
  • Treat your team to a bonus: One way to motivate your employees or contractors is with a cash reward for their hard work.
  • Build a cash buffer: According to one study, 30% of businesses fail because they run out of money. Having enough cash on hand can help your business weather any unexpected storms.

Moving forward with your tax prep

Though tempting, it’s important to not let your taxes fall to the wayside—especially after you’ve filed them. It’s easy to file, pay, and move on in your business. But savvy entrepreneurs know their work is never done—and that includes tax prep. When tax prep happens year-round, it’s far less daunting.

By Alexandra Sheehan

The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.

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