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.

Do you owe taxes but don’t have the money? Are you afraid of the tax trouble it will cause? Not sure what to do about this tax problem? Before you panic and worry yourself to death, know there are options available to address this tax situation. Be forewarned, not choosing an option and avoiding the tax issue could result in the IRS filing a Federal Tax Lein against you.

Here are 10 tax tips from the IRS for taxpayers who can’t pay taxes in full:

1. The IRS strongly encourage taxpayers to pay as much of the tax as possible. This will minimize the tax liabilities because the amount of interest and penalties owed will be less.
2. Each taxpayer’s situation is different, but some may qualify for a tax extension, a temporary delay, a payment (installment) agreement or an Offer in Compromise to satisfy the tax debt.
3. Taxpayers who need more time to pay the full amount should contact the IRS immediately about the tax problem using the phone number or mailing address printed on your tax bill.
4. A good tax tip is to consider getting a loan from a bank or finance company. The interest and fees will be lower than the interest and tax penalties imposed by the Internal Revenue Service.
5. Taxpayers who can’t pay the full amount of the tax could qualify for additional time, up to 120 days, to pay the tax debt in full. The advantage of this tax payment arrangement is that there is no fee and minimizes the interest and tax penalties.
6. Taxpayers who can’t afford to pay their taxes within 120 days should consider an installment agreement. There is a one-time fee of $105, an additional fee of $53 for direct deposit.
7. To apply for an installment agreement you can use the Online Payment Agreement application available on the IRS website; file a Form 9465, Installment Agreement Request; or call the IRS at the telephone number shown on your bill.
8. Even if you set up an installment agreement, the IRS may still file a Notice of Federal Tax Lein to secure the government’s interest until you make the final payment.
9. Taxpayers with serious financial hardships and limited income may be able to settle their tax liabilities for less than the full amount owed through an Offer in Compromise with the IRS. But be aware, if the IRS believes you could settle your tax debt in a lump sum or with payments, chances are you won’t qualify.
10. The top tax tip for taxpayers who can’t pay the full amount of taxes is to always respond to an IRS notice. If you disregard or fail to respond to the IRS notice, and do not make payments arrangements to pay your tax liabilities, the IRS is entitled to take collection action.

Taxpayers who can’t pay their taxes in full should heed the tax tips outlined above. The worst action a taxpayer could make is to avoid the issue altogether. Even though it’s a hard thing to do, call the IRS and arrange a tax payment arrangement to pay off your tax liabilities.

More information on the collection process is available at http://www.irs.gov.

Source: irs.gov

The month of April brings warm weather, major league baseball and the deadline for filing your 2010 income tax return? If you haven’t prepared your income tax, you still have options for filing before the April 15 tax deadline. Here are some of the options for filing your tax return.

The quickest and most efficient way to get your tax return in on time is to sign up for one of the many online tax services. They provide the software so you can file your income tax online. Most online tax services offer the service for free or at a steep discount. Taxpayers can also find tax coupons online by using searching the web using the keyword phrase “tax coupons”.

Another option is to contact the IRS. The IRS provides a free income tax preparation program for individuals earning less than $49,000 who cannot prepare their own federal income tax returns. The IRS Volunteer Income Tax Assistance (VITA) will help taxpayers prepare their income tax and help answer tax questions about special credits, such as Earned Income Tax Credit, Child Tax Credit, and Credit for the Disabled. The program offers free electronic tax filing (e-filing) at most of it’s sites. For more information on TCE, call 1-800-829-1040 or log onto www.irs.gov

Individuals who have tax problems or complicated tax situations should contact an income tax lawyer or tax consultant immediately. Tax lawyers can answer your income tax questions and act as your tax representative to the IRS. If you have serious tax problems, the price for a consultation with a tax attorney is worth it.

If you will not meet the tax deadline, you can file for a tax extension. Taxpayers have 3 choices for filing the income tax extension form (Form 4868, Application For Automatic Extension of Time To File U.S. Individual Tax Return); electronically, by paying part of your tax due with a credit card through an outside service provider listed on the form, or by mail.

If you file your Form 4868 electronically you will receive an acknowledgment or confirmation number and you do not need to mail in Form 4868. If you need to pay additional taxes, you may do so through the outside service provider or through e-file. Be advised that each tax service provider will charge a convenience fee based on the amount of the tax payment.

These are the most common options available for filing your tax return. For more information about income tax or filing an income tax extension visit the IRS website.

source: irs.gov