Some Last Minute Tax Filing Reminders
April 10, 2010
Here are some last minute filings tips for those individuals who have not year filed their 2009 federal and state income tax returns.
Do not miss the April 15th deadline.
Any individual who has a balance due and does not file his or her federal income tax return by midnight April 16th will have interest charges imposed on the unpaid balance, in addition to a failure-to-file penalty. If an individual cannot file by the deadline, then the individual should request an extension of time to file (see below). Interest charges on the unpaid amount and a failure-to-pay penalty (but not a failure-to-file penalty) will still be imposed if the individual files on time, or requests an extension, but does not pay all or some of the balance due by the deadline. To minimize interest and penalty charges, individuals who cannot pay the full amount due should attempt to pay as much as possible by the filing deadline.
There are several reasons why the IRS encourages individuals to file electronically. The two most important reasons: (1) e-filing is accurate. Most available tax preparation programs check for errors and missing information, thereby reducing the chances of delayed refunds or follow-up correspondence from the IRS; and (2) e-filing is fast. Once a return is accepted for processing, the IRS electronically acknowledges receipt of the return. Refunds take only about half the time of a paper return. Those individuals who choose direct deposit will receive their refunds in less time compared to individuals receiving their refunds via check in the mail.
Check for errors.
Most tax software programs find common errors on electronically- prepared returns. Those individuals who file on paper can avoid delays in processing and follow-up questions from the IRS by: (1) double-checking all figures; (2) ensuring Social Security numbers are correct; (3) signing forms where required; (4) attaching required schedules and forms; and (5) mailing returns or extensions by the April 15th filing deadline.
Electronic payments are safe and secure for paying taxes. The following are options for paying any tax balance due, including any tax due filed with an extension to file.
- Electronic funds withdrawal. An individual tax filer provides an electronic return originator (ERO) with account and routing transit numbers from a qualified account, such as a bank checking or savings account. The individual tax filer may choose the date on which the funds due will be withdrawn. The individual tax filer should verify that his or her financial institution provides an option for an electronic funds withdrawal.
- Credit card payment. If the ERO's software allows, the individual tax filer can make a payment by credt card with information submitted with the returns. Credit card payments may also be made by phone or internet through two credit card service providers: (1) Link2Gov Corporation (1-888-658-5465, http://www.pay1040.com); or (2) Official Payments Corporation (1-800-272-9829, http://www.officialpayments.com). There is, however, a service fee for payments made through the credit card service providers. But one advantage of using a credit card to pay any tax balance due is that it allows for on-time payment to the IRS and it gives the tax filer additional time to actually "pay" the tax due. This is because the credit card bill showing the taxes paid is normally mailed to the credit card owner one to two weeks following the close of the credit card billing cycle, obviously sometime after April 15.
- Electronic Federal Tax Payment Systems (EFTPS). Individual tax filers can pay balances due and estimated taxes year-round using EFTPS via a secure website at http://www.EFTPS.gov. After enrolling in EFTPS, the individual receives a confirmation package by mail. A unique Personal Identification Number (PIN) is mailed separately.
Request an Extension of Time to File.
Those individuals who cannot make the April 15th filing deadline should request a six-month extension of time to file by preparing and mailing IRS Form 4868, Automatic Extension of Time to File by April 15. A more efficient and safer method to request an extension is through the electronic filing of Form 4868. This can be done through the IRS Free File program. Using Free File to prepare and electronically submit Form 4868 is free to everyone. Information about the IRS' Free File program may be obtained at http://www.irs.gov/efile.
An extension to file reschedules an individual's filing deadline to October 15. But an extension of time to file is not an extension to pay. Those individuals who owe the IRS for 2009 taxes need to pay what they owe at the time they file the extension or they will be subject to a non-payment penalty.
Finally, under section 6161 of the Internal Revenue Code, individuals who cannot afford to pay any tax due on their 2009 federal income taxes may request an extension of up to six months in order to pay the taxes due. The individual must file IRS Form 1127 and the form must be received by the IRS by April 15, 2010. The form is sent to the District Director in charge of the district in which the individual files his or her taxes. The form, which includes the individual's written justification why the payment of the tax due will cause a financial hardship, must also be accompanied by:
- a complete statement of the individual's assets and liabilities as of March 31, 2010; and
- an itemized list of money the individual received and spent for the three month period ending on the day Form 1127 was submitted. The individual filing for an extension to file and to pay any taxes due must also provide a "security" that guarantees the payment of taxes due. Security satisfaction to the District Director in charge of the district in which the individual lives includes a bond, deed of trust on specific property or general assets, or a personal surety.
The IRS will not grant an extension to pay a tax deficiency that is a caused by negligence, intentional disregard of rules and regulations, or fraud with intent to evade tax. Interest will also be charged on the unpaid balance due. It is the individual's responsibility to pay the tax due for which the extension is granted before the extension expires (without waiting for a bill from the IRS).
There are two other April 15th deadlines for which extensions are not granted, namely:
- contributing to one's IRA for the year 2009; and
- the first estimated tax payment for 2010. Also, those individuals who live in states with income taxes need to make sure they file their taxes on time with their state revenue departments, or file for an extension to file, as well as to make sure they pay any 2009 state income taxes due.
About the Author
Edward A. Zurndorfer is a Certified Financial Planner and Enrolled Agent in Silver Spring, MD. He is a seminar speaker at federal employee retirement seminars throughout the country for the National Institute of Transition Planning, Inc. , and an author of numerous publications on federal employee benefits.