Just a reminder to all taxpayers (and tax preparers), the tax-filing and payment deadline is on October 15. Taxpayers and preparers are advised to look over their returns and then file electronically using the IRS e-file or the Free File system. This year more than 11 million taxpayers filed for an automatic six-month extension. Although October 15 is the last day for most of the 11 million who filed an extension, some people have more time. People who have more time are members of the military and others serving in Iraq, Afghanistan or other combat zones who usually have at least 180 days after their arrival home to file and pay any taxes due and people with extensions affected by Hurricane Isaac in Parts of Louisiana and Mississippi have until January 11, 2013 to file and pay.
The IRS advises taxpayers to see if they qualify for overlooked credits and deductions before filing. Some of these credits and deductions are:
- Benefits for low-and moderate-income workers and families.
- Savers credit for low-and moderate-income workers who contribute to a retirement plan (such as an IRA or 401 (k)).
- American Opportunity tax Credit and other educational tax benefits for parents and college students.
E-File: The IRS offers e-file and urges taxpayers to choose this filing method. Taxpayers can use either the brand-name software or online fill able forms. The brand name is offered by the IRS’s commercial partners of individuals and families with incomes of or less than $57,000. Other forms that can also be used are the electronic version of IRS paper forms available to all levels of income. Most paid tax preparers are required to file clients’ returns electronically; this method can also be chosen by taxpayers who purchased their own software. Taxpayers who choose direct deposit will receive their refunds sooner.
Payment options: October 15 is also the last day for unemployed workers who filed Form 1127-A and qualified for an extension to pay their 2011 income tax to pay what they owe. This is including interest at a rate of 3 percent per year, compounded daily. The late-payment penalty is usually .5 percent per month.
Taxpayers can pay what they owe by phone or online through the Electronic federal Tax payment System, by electronic funds withdrawal, or with a credit or debit card. If paying by credit or debit card there is a convenience fee by the private-sector card processor. Checks or money orders should be made out to the “United States Treasury.”
*In order to avoid late-filing penalties, taxpayers with extensions should file their return by October 15.
Struggling Taxpayers: One tax relief program is the IRS “Fresh Start” initiative. Setting up a payment agreement with the IRS is simple and can be done online. Taxpayers who own $50,000 or less in tax, penalties, and interest can use the Online Payment Agreement. This can be set up to pay monthly payments for up to six years; the taxpayer could also request a short-term extension to pay. Another method of requesting a payment agreement is by filing Form 9465-FS which can be found on the IRS website (IRS.gov). Offer-in-compromise is an additional agreement a qualifying taxpayer can make with the IRS.
To discover how we can help you with tax preparation services, please give us a call at 401.254.0151. We look forward to hearing from you.