Simply Junior

Most people filed their 2008 taxes online in a the month leading up to the due date. But for a variety of reasons, many taxpayers weren’t able to file 2008 taxes online at that time. Due to the tough economic conditions, many taxpayers didn’t have the money or time to file by April 15th. Usually, owing taxes feels like a major burden. But it doesn’t have to.

Instead of worrying about how you’re going to file your 2008 taxes, you can try to fix the problem instead. There are three basic steps: get the information you need, evaluate your options, and get in touch with the IRS.

The information you need is not just your tax forms (like your W-2 and 1099). It’s also important to know whether or not the IRS is expecting something from you. If you filed for an extension, you’re in luck. The IRS won’t be hassling you over your taxes owed until October 15th. That doesn’t mean you don’t have to pay (in fact, you need to pay an estimated amount in advance).

Even if you haven’t filed for an extension, you can still do your 2008 taxes online. The IRS doesn’t want you to, so they don’t allow you to e-file. But E-filing your taxes isn’t the only way to do them online. Since the IRS requires you to send them a physical piece of paper to file your taxes late, you’ll have to use a different process.

What you can do is simple: do your 2008 taxes online, and then print up the resulting forms and mail them in to the IRS. You get all the benefits of doing your 2008 taxes online, but you don’t have to worry about tripping up on some IRS rules. Of course, it’s a little extra work — a few printed pages, and a stamp.

Of course, doing your 2008 taxes on the Internet doesn’t just mean going to a website and filling out the same forms you’d fill out normally. To get the best value, you should pick a website that’s focused on helping you file your 2008 taxes online. Most good websites will have a tax terms glossary, a filing guide, and live help systems. These features all make it much easier to do your 2008 taxes online. The best feature of a site like this is that you can get the whole thing out of the way quickly. As you file your 2008 taxes online, you’ll find lots of questions that are easy to answer, and for the rest of them, the live help system will get you the answers you need.

Doing your 2008 taxes can be scary, and the IRS does a good job of making it look like you can’t do your 2008 taxes online. Fortunately, it’s much easier than it looks to prepare the filing online, and to get the whole tax problem behind you.

After you leave a job, there is a big tax question you will have to deal with and that is what should you do with any money you have in a qualified retirement plan with that former employer. This included the 401(k), stock bonus, profit-sharing and any other qualifying plan. Generally you would be advised to roll it all into an IRA.

While this usually makes a lot of sense, it allows you to take management of your funds for retirement and continue deferring taxes on income the funds generate. Be aware though, if this process is not handled correctly the rollover can end up being very costly. Let us take a look at the property way your should arrange your rollover tax-free.

Roll over directly (trustee to trustee)

If the decision to rollover is what you made, make sure you plan for a trustee-to-trustee or direct rollover from your retirement account into a rollover IRA. Don’t have the check written to you personally, make the check you receive from your company’s plan out to the trustee or the custodian of your new rollover IRA. You can even have a wire transfer made into your new IRA rollover account.) Since the new IRA has to be set up before you receive the rollover, your IRA account can remain empty until the rollover transaction is made.

The direct rollover is essentially important because if you get the check made payable to yourself there is a 20% taxable amount withheld for the federal income tax. Leaving you with sixty days to get the “missing” 20 percent and put it in the rollover IRA. And you will end up owing taxes on that 20%. And you will end up paying the dreaded ten percent early withdrawal tax as well if you are under 55.

If you are Over 55 you Should not Rollover Any of the Money You Need

Generally rollovers are good because they defer the taxes, but think about it this way… you are over 55 and you get a payout from the former employer’s retirement plan, you will not have to pay the premature 10% withdrawal tax if you keep the money (but you will still owe the income taxes). But if you roll that money into the IRA and then you need to take some out later, before the age of 59.5, you will have to pay a ten percent penalty tax on it.

Obeying the 60-Day Rule

This is another pitfall in the rollover, failure to meet their 60-day ruling. You will have to deposit the distribution into the new rollover IRA within the 60 day period in order to get the tax-free rollover. This 60-days will start the day after the funds are received from the company’s retirement account. And if the 60-day period ends on a holiday or weekend, you will not get any slack.

The Bottom Line Is

It might seem like a simple task, however arranging your tax-free rollover of your retirement account is not so simple. I have seen failed rollover attempts from people many years now and there is no end in sight. Ask the advice of a tax pro to clarify anything you don’t understand that we went over in this article.