Some Last Minute Tax Filing Reminders
Edward A. Zurndorfer, Certified Financial Planner
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.
File electronically.
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.
Pay electronically.
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.
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