I apologize if this article in not applicable to you.
Attention U.S. Income Taxpayers
April 15, 2010, the deadline for filing and paying your 2009 federal income taxes, is now just ONE WEEK AWAY.
If you have already filed and paid your taxes: Congratulations – you can skip down to the comment section if you like. Otherwise, if you’ve put off everything that’s tax-connected or just haven’t completed this annual task, now is the time to get busy.
There are options available to you, but you need to select one and follow it through.
In the current poor economy with tremendous government spending and rising debts & deficits, the Internal Revenue Service (IRS) will definitely be on the lookout for returns and payments due.
According to columnist Bob Shallit of the Sacramento Bee, IRS agents pursued a 4-cent tax liability ($202.35 with penalty and interest) from a Sacramento taxpayer on March 10.
It’s best not to meet with IRS agents visiting your home or workplace in a professional capacity. By taking action now, you can prevent such visits.
OPTIONS – What Can I Do?
By remembering that the Internal Revenue Code (the “tax code”) is complicated and confusing, you’ll have a clue about available options. It’s not easy, but it’s “doable.” Don’t waste time trying to second-guess the system. Just dig right in.
When you come right down to it, there are really only two options:
- Complete and file your return and pay any tax liability, or
- Obtain an “Extension to File” and pay any tax liability.
OPTION 1 – The “Nike Option”: JUST DO IT. Gather all of your tax-related info plus a copy of your tax return from last year (for comparison), and prepare this year’s return. Either that, or find a reliable tax preparation service, make an appointment, and take the work to them.
One way will cost you personal time, the other fees. A guarantee usually comes with fee-based preparation. So, if you don’t trust your math & reading skills, having someone else “do it” might be the better choice. Note: fees tend to increase toward the end of tax season; the guarantee still makes them worth it.
When completed, just mail in your prepared tax return (with any tax payment). Tax preparers normally recommend “certified, return receipt requested” service – you’ll have proof of delivery in case you need it. Of course, electronic filing of your returns (IRS e-file) is quicker and a bit more secure. (Electronic payment of tax is available as well.)
OPTION 2 – By using this option, you can get an extension of time to file your return. Normally, the payment of any tax is due on the regular due date (April 15, 2010 for calendar year taxpayers).
In some situations, however, you can get an extension of time to file AND PAY any tax due. Of course, the IRS seldom, if ever, hands out “freebies” – if you pay the tax due after the regular due date, you will be charged interest from the regular due date until the date the tax is paid. Yes, this does apply to those who have obtained an extension of time to file and pay any tax due.
There are different types of extensions available to different taxpayers. The two most common are:
- An automatic 2-month extension, and
- An automatic 6-month extension.
Automatic 2-Month Extension –
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You may qualify for this extension that provides not only a 2-month extension of time to file your return, but up to an additional 2 months to pay your tax due (with interest). To qualify for this extension, you must meet the following test:
You are a U.S. Citizen or Resident Alien, and on the regular due date of your return:
- You are living outside of the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico, or
- You are in military or naval service on duty outside the United States and Puerto Rico
Most U.S. taxpayers living and working in or retired in The Philippines qualify for this extension. Please note that those here “on extended vacation” do not qualify for this extension. If married taxpayers file a joint return, either spouse can qualify for this extension. If married taxpayers are filing separate returns, then this automatic extension applies only to the spouse who qualifies for it.
To obtain this automatic extension, a U.S. taxpayer must attach a statement to his/her tax return explaining which of the two situations listed above qualified the taxpayer for the extension.
Automatic 6-Month Extension –
This is the most common extension in use by taxpayers. If you are not able to file your return by the regular due date, you can generally obtain an automatic 6-month extension. Please note that this extension is for return filing only – payment of any tax liability is due on the regular due date.
To obtain this automatic extension, a U.S. taxpayer must file a Form 4868 either paper or via IRS e-file (electronic filing). The form must show “your properly estimated tax liability based on the information available to you.”
You may not be eligible to use the automatic 6-month extension of time to file if:
- You want the IRS to calculate your tax for you, or
- You are under a court order to file by the regular due date.
A taxpayer who employed an automatic 2-month extension and needs additional time should file Form 4868 seeking an automatic 6-month extension. In doing so, the taxpayer must count the 2-month extension period within the 6-month requested. I.e., this taxpayer would be requesting and generally receiving an additional 4-month extension to file.
The choice is clear: either “Do It” or “Extend It.” It’s your choice, but also your responsibility.
There are other extensions available (e.g., an additional extension of time for taxpayers out of the country) but they are more complex and outside the scope of this article. The aim here is to get something accomplished – to stay within the boundaries of tax statutes. The option you select and perform will do just that.
IRS Circular 230 Disclosure
To ensure compliance with requirements imposed by the IRS, I must inform you that any U.S. federal tax advice contained in this document is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.