What should you do if you can’t file your taxes by the tax deadline? The answer is to not to panic. The IRS has options available for those who can’t file their returns or pay their taxes on time. You can even file for an extension.

Tax-filing extensions are available to taxpayers who need more time to finish their returns. Remember though, this an extension of TIME to file, not an extension of time to pay. However, if you are having trouble paying what you owe, you probably can qualify for a tax payment plan or other tax debt relief. In fact, the IRS very recently revised its Fresh Start initiative, which offers tax penalty relief for the unemployed and self-employed whose income has dropped.

Taxpayers who haven’t finished filing their taxes can get an automatic six-month extension by filing the physical income tax form 4868 or online through the IRS Free File link.

If you file this form properly, you will avoid the late-filing penalty, which is normally five percent per month based on the unpaid balance. Plus, any payment made when you file for the tax extension will reduce or eliminate interest and lae-payment penalties that apply to payments made after the tax deadline – April 17. The current interest rate is 3% per year, compounded daily, and the late-payment penalty is normally 0.5% per month.

Preparing your income tax return doesn’t have to stress you out. There are several things you can do to ease the pain when it’s time to file your tax return. The IRS offers taxpayers several tips to help you complete the task of preparing your income tax return.

1. Don’t wait until the last minute
   Don’t wait until the last day to file taxes. Rushing to file by the tax due date may cost you money. It increases the risk of making errors and it may cause you to overlook potential tax savings. If you don’t know how to do your taxes, seek out tax return help from various sources that are available. You can seek tax help from your accountant, tax preparer, tax attorney, tax software or even a knowledgeable friend. You can even visit the IRS website for tax help and to get answers to your tax questions.
2. Use Free File
   Qualifying taxpayers can take advantage of the income tax services provided by the IRS. Free File allows you the ability to file your income tax using online tax software for free. Everyone can find an option to prepare their tax return and e-file it for free. If you made $57,000 or less, you qualify for free tax software. If you made more than $57,000 and know how to prepare your tax return, there’s Free File Fillable Forms, the electronic versions of IRS paper forms.
3. Try IRS e-file.
   IRS e-file is quickly becoming the preferred means for filing income tax returns. For the 2010 tax year almost 80 million people used e-file to file their income tax return. If you owe taxes, you can file immediately and pay later (by the April 17 tax due date). E-file offers you the option of receiving your tax refund via direct deposit. It’s the quicker and fastest way to get your tax refund, sometimes in as little at 10 days.
4. Don’t panic if you can’t pay.
   If you can’t pay the full amount of taxes you owe by the mid-April deadline, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. A majority of taxpayers eligible for an Installment Agreement can apply using the web-based Online Payment Agreement application available at the IRS website. www.irs.gov. To find out more about this simple and convenient process, type “Online Payment Agreement” in the search box at www.irs.gov.
5. Request an extension of time to file – but pay on time.
   If you’re not finished preparing your tax return by the tax due date, you can get an automatic six-month extension through Oct. 15. In order to get a tax extension it must be filed or postmarked by the April 17 deadline. But remember, a tax extension does not give you more time to pay any taxes due. If you have not paid at least 90 percent of the total tax due by the April deadline you may also be subject to an estimated tax penalty. You can obtain an extension through Free File at www.irs.gov/freefile or by calling 800-TAX-FORM (800-829-3676) to have a paper form mailed to you. Allow at least 10 days for mailed forms and publications.

Take advantage of these tips to reduce your tax season stress and remember the IRS is always available to provide tax help, answer your tax questions and guide you in your quest for free tax software.

Are you struggling to pay back taxes, IRS interest or tax penalties? The IRS has announced a new initiative to help struggling taxpayers who owe the IRS back taxes, penalties and/or interest on their tax debt. The Internal Revenue Service has effected a major expansion of it’s “Fresh-Start” program that will provide new penalty relief to the unemployed and making tax installment agreements available to more taxpayers.

The expansion calls for certain taxpayers who have been unemployed for 30 days or longer will be able to avoid failure-to-pay penalties. They are also doubling the the dollar threshold for taxpayers eligible for installment agreements.

The tax penalty relief is a six-month grace period on failure-to-pay penalties will be made available to certain wage earners and self-employed individuals. The request for an extension of time to pay will result in relief from the failure to pay penalty for tax year 2011 only if the tax, interest and any other penalties are fully paid by Oct. 15, 2012.

The penalty relief will be available to two categories of taxpayers:

• Wage earners who have been unemployed at least 30 consecutive days during 2011 or in 2012 up to the April 17 deadline for filing a federal tax return this year.
• Self-employed individuals who experienced a 25 percent or greater reduction in business income in 2011 due to the economy.

This tax penalty relief is subject to income limits. A taxpayer’s income must not exceed $200,000 if he or she files as married filing jointly or not exceed $100,000 if he or she files as single or head of household. This penalty relief is also restricted to taxpayers whose calendar year 2011 balance due does not exceed $50,000.

The tax installment agreement states that effective immediately, the threshold for using an installment agreement without having to supply the IRS with a financial statement has been raised from $25,000 to $50,000. This is a significant reduction in taxpayer burden.

Taxpayers who owe up to $50,000 in back taxes will now be able to enter into a streamlined agreement with the IRS that stretches the payment out over a series of months or years. The maximum term for streamlined installment agreements has also been raised to 72 months from the current 60-month maximum.

The IRS recognizes that many taxpayers are still struggling to pay their bills so the agency has been working to put in place more common-sense changes to the Offers In Compromise (OIC) program to more closely reflect real-world situations.

So how do you get a fresh start from the IRS? By taking advantage of the tax penalty relief and tax installment agreements offered by the IRS.

For more on tax penalty relief, tax installment agreements, Offers In Compromise or other tax related issues, visit the IRS website.