Unfortunately, it’s that time again. There’s less than two weeks left before you have to file 2011 tax returns. Of course, you can ask for an extension and it will be normally granted without any problem. But if you owe money, it must be in the mail (along with the extension request form) by the April 17 deadline to avoid penalties. If you’re due a refund, filing late doesn’t matter. Indeed, you don’t ever have to file; after three years the IRS keeps your money. Some $2 billion annually is “gifted” from non filers this way.
If you owe money and can’t pay it you should still file a return. Doing so starts the clock on the 10-year limit the IRS has to get that money. Moreover, you’ll avoid some of the penalties applied to non filers that owe taxes when the IRS eventually catches up to you.
If you can’t pay, contact the IRS for a short term extension. Generally, with extenuating circumstances, these are granted but for not more than 120 days. You need to talk to someone at the IRS directly, however. There’s no form for this. Another option is setting up an installment plan, usually for a 3-year period with monthly payments. There’s a fee of $105 ($52 if you agree to direct debits). The IRS charges interest on the unpaid balance of this “installment loan” but it’s a lot less than credit card rates. If you are interested, go to www.irs.gov and search for “online payment agreement.”
If you are real stress lover who waits until the last minute of the last day and then rushes to the post office to get postmarked before midnight, chances are good you’ll make a mistake that can come back to haunt. So, before mailing the return, check it one last time for these errors:
• Sign the return. Sounds silly, but every year, thousands of returns are filed without signature. What’s the problem? The IRS won’t process the return. You won’t get your refund, or if you owe money, the return may be considered late, thus incurring penalty fees. Eventually, the IRS will send you a letter; but it could take months.
• Double check your math. Transpositions (29 becomes 92), addition and transferring numbers from schedules to the tax return are where most mistakes happen. You may owe more tax or your refund may be less. Notification of miscalculations is usually prompt, but it’s always a surprise when you owe more money.
• Use the IRS mailing label. The tax packet you received from the IRS contains a mailing label and a pre-addressed envelope. Using them ensures that the return goes to the correct processing center. The mailing label allows the return to be read more easily and accurately. Your refund will get to you faster. Even if the label has wrong information (e.g. you have moved), make corrections by hand and use the label anyway.
• Make sure your correct Social Security number is on the return. Everything tracks to that number. Some tax breaks (e.g. child credits) can be lost if the number is incorrect.
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