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, href="http://www.officialpayments.com">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 href="http://www.irs.gov/efile">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:

1. a complete statement of the individual's assets and liabilities as of March

   31, 2010; and

2. 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:

1. contributing to one's IRA for the year 2009; and

2. 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.