Missed the Income Tax Deadline – IRS Offers Help for Taxpayers

Here is some advice for taxpayers who missed the tax filing deadline.
Don’t panic but file as soon as possible. If you owe money the quicker you file your return, the less penalties and interest you will have to pay. Even if you have to mail us your return, the sooner we receive it, the better.

E-file is still your best option.  IRS e-file programs are available for most taxpayers through the extension deadline – October 15, 2012.

Free File is still available.  Check out IRS Free File at irs.gov/freefile.  Taxpayers whose income is $57,000 or less will qualify to file their return for free through IRS Free File. For people who make more than $57,000 and who are comfortable preparing their own tax return, the IRS offers Free File Fillable Forms. There is no software assistance with Free File Fillable Forms, but it does the basic math calculations for you.

Pay as much as you are able. Taxpayers who owe tax should pay as much as they can when they file their tax return, even if it isn’t the total amount due, and then apply for an installment agreement to pay the remaining balance.

Installment Agreements are available.  Request a payment agreement with the IRS.  File Form 9465, Installment Agreement Request or apply online using the IRS Online Payment Agreement Application available at irs.gov.

Penalties and interest may be due.  Taxpayers who missed the filing deadline may be charged a penalty for filing after the due date. Filing as soon as possible will keep this penalty to a minimum.  And, taxpayers who did not pay their entire tax bill by the due date may be charged a late payment penalty. The best way to keep this penalty to a minimum is to pay as much as possible, as soon as possible.

Although it cannot waive interest charges, the IRS will consider reductions in these penalties if you can establish a reasonable cause for the late filing and payment. Information about penalties and interest can be found at Avoiding Penalties and the Tax Gap.

Refunds may be waiting. Taxpayers should file as soon as possible to get their refunds. Even if your income is below the normal filing requirement, you may be entitled to a refund of taxes that were withheld from your wages, quarterly estimated payments or other special credits. You will not be charged any penalties or interest for filing after the due date, but if your return is not filed within three years you could forfeit your right to the refund.

IRS Tax Tip 2012-06

Extensions and Payment Options

With the income tax season winding down, we want to remind you how to request some extra time to file your return and the options you have to pay your tax bill.

If you need more time to file your return, you can get an automatic six-month extension of time to file from the IRS.  You must file for an extension by the April 17 deadline.  An extension will give you extra time to get your paperwork to the IRS, but it does not extend the time you have to pay any tax due. You will owe interest on any amount not paid by the deadline, plus you may owe penalties. To get an extension:

• IRS Free File - Traditional Free File and Free File Fillable Forms can both be used to file an extension for FREE.  Access the Free File page at www.irs.gov.

• IRS e-file - Use IRS e-file to request an extension by using tax preparation software on your own computer or by going to a tax preparer.

• Form to File - Mail in IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. It must be postmarked by April 17, 2012.

Taxpayers that are ready to file their returns and those that have already filed and need to pay a tax bill have payment options:

• E-file - File electronically and authorize an electronic funds withdrawal via tax preparation software or a tax professional.

• Phone - Pay by phone or online using a credit card.

• Mail - Pay by check or money order made payable to the “United States Treasury.” Be sure to include your name, address, Social Security number listed first on the tax form, daytime telephone number, tax year and form number. Complete and include Form 1040-V, Payment Voucher, when mailing your payment to the IRS.

If you owe tax with your federal tax return, but can’t afford to pay it all when you file, the IRS has options to help you keep interest and penalties to a minimum. File your return on time and pay as much as you can with the return, then:

• Request an installment agreement - Use the Online Payment Agreement application at www.irs.gov or by file Form 9465, Installment Agreement Request with your return. The IRS charges a user fee to set up your payment agreement.

• Additional time to pay - You may request a short additional time to pay your tax in full using the Online Payment Agreement application on www.irs.gov. Taxpayers who request and are granted an additional 120 days to pay the tax in full generally will pay less in penalties and interest than if the debt were repaid through an installment agreement over a greater period of time. There is no fee for this short extension of time to pay.

• Extension of time to pay - Qualifying individuals may request an extension of time to pay and have late payment penalties waived as part of the IRS Fresh Start initiative. To see if you qualify visit  www.irs.gov and get Form 1127-A, Application for Extension of Time for Payment.  This application must be filed by April 17, 2012.

TAX TIP 2012-05

Managing Your Tax Records After You Have Filed

Keeping good records after you file your taxes is a good idea, as they will help you with documentation and substantiation if the IRS selects your return for an audit. Here are five tips about keeping good records.

1. Normally, tax records should be kept for three years.

2. Some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.

3. In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return.

4. Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.

5. For more information on what kinds of records to keep, see IRS Publication 552, Recordkeeping for Individuals, which is available on the IRS website at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

IRS Tax Tip 2012-71