Now that April 15th has passed, most people have fulfilled their tax obligations for 2014. For many, the filing process is complete and taxpayers have settled their balance with Uncle Sam (or are waiting on a refund). However, there are still some individuals who will have to do additional work before wrapping up their 2014 tax year. Many people chose to take advantage of six-month extensions, while others may have forgotten altogether and need to determine the best strategy moving forward. Hopefully this will clear up where you stand if you have yet to file your return for 2014.

Extensions

If you were unable to organize all of your tax documents by April 15th, you may have filed for an extension. An extension gives you an additional six months to file your return before it is considered late. This prevents a failure-to-file penalty from being assessed until after October 15th, 2015.

However, filing for an extension of time does not give you an additional six months to pay the taxes you owe. If you simply file for an extension without remitting some or all of the tax that you owe, you will be assessed a failure-to-pay penalty of one-half of 1% until the balance is paid.

It can be difficult to estimate the taxes you will owe without preparing a return (this is why you filed for an extension in the first place), so check with a tax professional to see if you need to remit any additional payments sooner rather than later in order to avoid these accrued penalties.

Unfortunately, the deadline for filing an extension was April 15th, so if you did not file a return or file for an extension, your return is now considered late.

Did Not File Return or File Extension

If you were unable to complete your return or file for an extension before the April 15th deadline, your return is past due. The penalty for not filing a return is 5% of the tax due for each month, or part of the month, that the return is late (maximum of 25%). The penalty that you face will continue to accrue until you file your return.

The best advice I can give is to try to gather all of your documentation as quickly as possible in order to prevent the penalties from accruing. Even if you do not think you will be able to pay the amount of tax due immediately, it is always best to file your return as timely as possible. There is always the option to apply for a payment plan with the IRS in which you have up to five years to pay off the outstanding tax.

If you file your return late and are due a refund, you will not be assessed any penalties or interest since there is not a balance due to the government. However, there is a three-year statute of limitations on refunds. The three-year window begins the day the tax return was due. This means if you did not file an extension this year, you have until April 15th, 2018 to receive a refund for the 2014 tax year.

If your income was below the filing threshold, you are not required to file a tax return. The threshold varies for each filing status, but if you are single and under age 65, you do not have to file a tax return if your W-2 income was below $10,150. However, if you are a professional poker player and file a Schedule C that shows self-employment income, you are required to file a return if you earned more than $400 in income.

There are other sources of income that could trigger filing requirements, so I would recommend consulting with a tax professional to determine if you are required to file a return.

Report of Foreign Bank and Financial Accounts (FBARs)

Gamblers who play online poker or make sports wagers on a non-regulated site may need to file FinCEN Form 114, also known as an FBAR. This is an informational form that displays your accounts with non-regulated sites and treats them as foreign bank accounts. Since all non-regulated sites are domiciled outside of the US, it has been determined that they should be treated in the same manner as foreign bank accounts.

The most common non-regulated and online e-wallet sites we file include:

Black Chip Poker
Bovada
Carbon Poker
Full Tilt Poker
Merge Gaming
Neteller
Party Poker
PokerStars
Skrill

If the total amount of your combined accounts was greater than $10,000 at any point during the year, you must file an FBAR that lists all of your accounts. Many people will file this form along with their personal tax return, but they are not due until June 30th, 2015. These forms cannot be mailed; they must be e-filed using the online system.

Looking Forward to 2015

Even if you filed your 2014 tax return before the deadline, it is never too early to begin thinking about tax planning for the current year. If you are a professional gambler or have a sizeable score as an amateur gambler, you should consider sending in estimated tax payments each quarter. The deadlines for each quarter are: April 15th, June 15th, September 15th and January 15th.

The amount you submit is based off two factors: last year’s tax owed and this year’s estimated tax owed. In order to properly determine the amounts to be remitted, you should calculate your net gambling winnings or losses from the quarter. These figure can then be used to determine the amount of money you should submit to the IRS to prevent an underpayment penalty.

If you have any questions or concerns, please feel free to reach out to me at [email]rkondler@kondlercpa.com[/email] or visit our website kondlercpa.com