File Your 2001 Taxes by Friday, April 15th

Lots of readers have asked me about filing their 2001 tax returns. This is really important, so pay attention. You must file your 2001 tax returns by April 15th, 2005, if you want to get your tax refund. After April 15th, your refund "expires" and disappears forever. Here's how to prepare your 2001 return quickly.

First, follow the step-by-step instructions for filing a late tax return. In that article I use the example of a 1999 tax return, but the steps are still the same. Prepare your return!

Second, get read up on all the laws about filing a late return. This is going to be a little bit more tedious, but these laws are essential for understanding why filing a tax return now is in your best interest.

Third, file your return. I suggest you submit your tax return to the IRS in person. I provide instructions for getting a receipt copy in the first article. If you don't feel like standing in line at the IRS, then mail your tax return by certified mail. Make sure it is postmarked not later than April 15th, 2005. Keep the certified mail receipt with postmark as your proof of mailing. This will likely come in very handy.

Fourth, if you need to, find a tax professional with experience in prior year returns. Normally, trying to find a tax preparer this late in the filing season is tough work. Those of us who specialize in back taxes clear our schedules during the last week before April 15th to do nothing but focus on back taxes.

Whether you prepare the returns yourself or hire someone else to prepare them, expect to spend about a day putting this altogether. Don't panic! You have a game plan. Just print out the step-by-step plan, and you'll be fine.

To answer some particular questions that have been asked this past week:

Q. Can I file my 2001 tax returns now, and then amend the return later to get additional refunds?

A. No. April 15, 2005, is the Very Last Day to file any type of return (original or amended) to claim refunds from the year 2001.

Q. Can I get an extension on my 2001 tax returns?

A. No. April 15, 2005, is the Very Last Day to claim a refund for the year 2001. No more extensions can be granted. This is written into the tax laws and is called the statute of limitations.

Q. Are there any exceptions to the 3-year statute of limitations?

Yes, there are two major exceptions to the 3-year statute of limitations. To begin with, the three-year limit is written into the tax code at Internal Revenue Code Section 6511. The 3-year period may be suspended (the clock stops ticking, so to speak) in two cases. The taxpayer must be physically disabled or mentally disabled. In either case, the taxpayer must be "unable to manage his [or her] financial affairs by reason of a medically determinable physical or mental impairment..." [Code Section 6511(h)(2)]. Also, the taxpayer must not have a financial guardian, such as a spouse, family member, or caregiver who is managing the taxpayer's financial affairs.

What this means, in practical terms, is that the 3-year limit is almost never broken. If you do file past the 3-year deadline and you want to challenge the statute of limitations, you have better have excellent medical documentation to prove your case before the IRS.