Simply Junior

April 15 is fast approaching but there’s no way you can get your personal income tax return done by then. What’s a procrastinator to do? File an extension, of course.

But perhaps you are wondering whether this is the best option for you. Read on to find out.

You can automatically extend the April 15 due date to October 15 by filing Form 4868, “Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.” So now you have six more months to file your personal income tax return.

The nice thing about Form 4868 is that simply filing this form grants an automatic, no-questions-asked 6-month extension. You don’t have to have a reason. Just sending this form to the IRS on or before April 15 gets you the extra six months.

But here’s another important point about Form 4868: This 6-month extension is NOT an extension to pay any tax you may owe on the tax return. Form 4868 only grants an extension of time to file the tax return.

So, if you usually get a refund on your personal tax return, you are OK. But, if you think you might have a balance due, or if you are not sure, then you should go ahead and prepare the return to the best of your ability, do the calculations, and see where you stand.

If you are getting a refund, great. If you’re not in a hurry to get the refund, then file the extension form and wait until October 15 to send in the return. But if you have a balance due on the return, then you should send in your balance due with Form 4868. That way you avoid any penalty and interest for late payment of tax.

When October 15 rolls around, you send in the return, showing the Form 4868 payment as a credit. The end result is this: you paid your tax on time (April 15), and you filed your tax return legally late (October 15) because you filed the extension form on time.

Obviously, the key here is whether or not you have a balance due on your return. If you have a balance due, but don’t send in the payment with Form 4868, then you will have penalty and interest charges for paying the tax after April 15.

Bottom line: Do not overlook the fact that Form 4868 does not grant you an extension of time to pay the tax. It only gives you an extension of time to file the return.

Can’t Pay: You’re in a panic. Your taxes are due, and you have no money to pay them with. What can you do when you can’t pay your taxes? Will you end up buried in debt? No. The solutions to this problem are actually surprisingly simple.

Human Side: You need to appeal to the human side of the IRS workers. They’re not completely heartless. Let them know that although you attempted to save money to pay for your taxes, you couldn’t. You also need to provide reasonable cause for not having the money to pay your taxes. But don’t just use any dumb excuse like, “I already spent the money!” Be detailed and use common sense.

Steps To Take: Here’s a good option to try if you cannot pay your taxes in full before April 15.

-Send the IRS as much money towards your taxes as you can

-Complete Form 9465 “Installment Agreement Request”

-Staple the form to the front page of your Tax Report

Be Patient: If you are sending your Installment Agreement around Tax Season, it’s going to take a while for the IRS to get back to you. If they take longer than 30 days, consider resubmitting the paperwork or hiring a tax professional that can help you in the process.

One More Option: You can extend the amount of time you have to file your tax returns. You’ll have to file Form 4868 “Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.” But in order to qualify you must:

-Owe less than $10,000 (including interest and penalties)

-Not be a business

-Have no other balances due to the IRS

Early Warning: The IRS gives you ample time to file your Tax Return. So you’re not going to have any excuses if you don’t pay on time. Follow the steps I’ve provided if you know you will not be able to pay, and stay out of debt with the IRS.

Now You Have The Smoking Gun…Use it!

Want to know how you can calculate your Federal income tax return for free?

Maybe you’re wondering how much your tax refund will be, or you might want to know if you’re going to owe money at tax time. If you would like to find out, then I suggest using an online Federal income tax refund – return calculator.

To calculate your tax refund, you must first find a website with tax calculating software such as TurboTax Online. Start by creating a user account at the website you have selected. Now you’ll be able to use their tax preparation program to calculate your taxes. Depending on your situation, this should take about 30 minutes or less to complete.

You will be asked to enter information as you go, such as marital status, income, and deductions. Soon you will see the tax calculator at work, as you enter your income and deduction information. After your taxes have been calculated, it’s time for a review. If you’ve missed a deduction, you can enter it in and put the calculator to work again.

This is the best method I’ve found for figuring my taxes in advance every year.

This year, when you’re ready to start your Federal taxes, think about using an online income tax calculator to figure your tax refund, or money owed. You’ll like seeing your refund amount being displayed as you go. You might even be alerted to a tax deduction you’ve missed, which means, more tax savings for you!

The date for submission of tax returns for 2007 is April 17th. In case you miss the deadline for some reason you must still file a return as soon as possible. In case you owe taxes the IRS will impose fines, interest on money owed, and penalties. However, if a refund is due then interest and penalties will not be imposed. The IRS rules state that to get a refund you must file the return within three years of the due date.

For late filing of tax returns you may need:

o Form 4868 – application for automatic extension of time to file US Individual Income Tax return.

o Form 4848 (SP), application for a Spanish version.

o Form 1127 application for extension of time for payment of tax.

o Form 2350 application for extension of time to File US Income tax.

When filing a late tax return you must:

o Request for an extension of time to file the return. The four month extension is only for filing, all taxes that are due must be paid in full. Request for an extension can be made by calling: 1-888-796-1074. Or, e-file form 4868. Or mail a form to the IRS using certified post.

o If you are unable to pay the taxes due in full, request the IRS for account resolution packages. Request permission to pay the taxes due in installments. Never avoid filing a tax return.

o Be honest and file accurate returns and find out from the IRS what procedures are to be followed for late filing of tax returns.

o If the procedures for late filing seem too complicated consider taking the help of a tax professional who has several years of experience dealing with late filing of tax returns and knows the laws inside out. Tax professionals will be able to deal with incomplete documentation and deal with IRS negotiations regarding your taxes, penalties, or interest.

o Find out all about IRS tax penalties and interests charged. Considerable information is at the IRS web site.

o Before you file late tax returns find out what the “statutes of limitations” are and plan your tax strategy taking these into consideration.

o Check your returns thoroughly and ensure that all documents are in place.

o Sit down and plan on how you will get out of tax debt. And in case there is an IRS investigation, levy, or lien how you are going to present your case.

o Take the help of tax professionals and plan on how you will get out of trouble and streamline your tax payments so that you get back on schedule.

Review your overall tax situation and find ways to reduce your taxes, make tax payments in time, and organize your financial documents in a way that you are able to file tax returns on time every time.