HURRY!! Last Minute Tips for Taxpayers

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April 17, 2012 by msquaredlaw

Hello Fellow Taxpayers! 


Today is the deadline for filing your income tax return or filing for a six-month extension of time to file your return.  You need to mail either your tax return or your request for extension TODAY.  We recommend mailing your return or request for extension via certified mail return receipt requested and having your white slip stamped by the post office.

If you are unable to complete your income tax return today, 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.

Requesting an Extension

You can request an extension in the following ways:

1. IRS Free File:  Traditional Free File and Free File Fillable Forms can both be used to file an extension for free.   You can access free file here.

2. 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.

3.  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 today, April 17, 2012.

Paying Your Taxes

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

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

2.  Phone or Online:  Pay by phone or online using a credit card here.

3.  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.

File Your Tax Return – Even If You Can’t Afford to Pay

You should file your return even if you can’t afford to pay.  The IRS can assess a penalty if you fail to file, fail to pay or both.  Filing your return on time (or timely requesting an extension) will avoid an unnecessary failure-to-file penalty, which is usually more than the failure-to-pay penalty.  See our prior discussion on this issue here.

IRS Options

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 additional time to pay in the following two ways:

1.  Additional time to pay:  You may request a short additional time to pay your tax in full using the Online Payment Agreement application on 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.

2.  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 and get Form 1127-A, Application for Extension of Time for Payment.  This application must be filed by today, April 17, 2012.

Types and Amounts of Penalties

If you do not file by the deadline, you might face a failure-to-file penalty.  If you do not pay by the due date, you could face a failure-to-pay penalty.

Failure-to-File Penalty.  The penalty for filing late is usually 5 percent of the unpaid taxes for each month or part of a month that a return is late. This penalty will not exceed 25 percent of your unpaid taxes.  If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.

Failure-to-Pay Penalty.   If you do not pay your taxes by the due date, you will generally have to pay a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid. This penalty can be as much as 25 percent of your unpaid taxes.

NOTE:  If you request an extension of time to file by the tax deadline and you paid at least 90 percent of your actual tax liability by the original due date, you will not face a failure-to-pay penalty if the remaining balance is paid by the extended due date.

Both Penalties Can Be Imposed.   If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty.  However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.

Excuses, Excuses.   You will not have to pay a failure-to-file or failure-to-pay penalty if you can show that you failed to file or pay on time because of reasonable cause and not because of willful neglect.

If you would like to speak with us regarding your options, please contact us.

Muiños & Morales


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