Message-ID: <10600132.1075856131660.JavaMail.evans@thyme> Date: Mon, 9 Apr 2001 07:51:00 -0700 (PDT) From: sandra.brawner@enron.com To: kennethbrawner@msn.com Subject: Income Tax - Information Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Sandra F Brawner X-To: kennethbrawner@msn.com X-cc: X-bcc: X-Folder: \Sandra_Brawner_Jun2001\Notes Folders\'sent mail X-Origin: Brawner-S X-FileName: sbrawne.nsf April 8, 2001, 10:45PM Learn the ins and outs of filing after mid-April deadline By GARY KLOTT Tribune Media For the many millions of individuals who have yet to file their 2000 income tax returns, there is no reason to panic. If you need more time to file your return, you can easily get a filing extension. And if you can't afford to pay your tax bill now, you can buy more time to pay up. While you may be subject to interest and penalties for payments made after April 16, you can put off the day of reckoning for months without fear that IRS collection agents will come after you. There is even a loophole in the law that will enable many individuals to get an extra month to pay up without being assessed interest or penalties. Nevertheless, April 16 is a critical deadline for anyone who has yet to file his tax returns. You'll need to file either your tax return or an extension request by the deadline. And to avoid interest and penalties, you'll generally need to pay any taxes owed by April 16. April 16 is also the deadline for making IRA contributions for 2000 returns and for making the first installment of quarterly estimated taxes for 2001. Filing extension: If you'd like more time to file your return, getting a filing extension is simple. In fact, the IRS has expanded the options this year for obtaining a filing extension. You can now do it by phone, computer or mail. The traditional way to get an extension is to fill out IRS Form 4868, "Application for Automatic Extension of Time to File U.S. Individual Income Tax Return" and mail it to the IRS by the April 16 deadline. If you're using tax-preparation software or a tax professional, you can file your extension request by computer. Or you can phone in your extension request by calling 888-796-1074. If you owe the IRS money, another option for requesting an extension is to make the payment by credit card (American Express, Discover or MasterCard) on the Internet or by phone through one of the two companies the IRS has authorized for processing credit card payments. Details on the option are included in the Form 4868 instructions. By making the extension request, the IRS will automatically give you four more months, until Aug. 15, to file your return. You can get an extension for any reason. No explanation is asked for when requesting an extension. But be aware that your extension request only gives you extra time to file your return, not to pay your taxes. To avoid interest and possible penalty charges, you must estimate how much you owe and make the payment with your extension request by the April 16 deadline. Unable to pay: If you can't afford to pay your tax bill, you should at least file an extension request by the April 16 deadline. Though you'll be subject to interest and possible penalty charges for late payment of your taxes, you'll avoid being hit with a late-filing penalty, which runs a steep five percent a month (up to a maximum 25 percent.) Installment plan: If you still don't have the cash to pay your taxes by the time your extension runs out on Aug. 15, you can negotiate with the IRS to pay your balance due in monthly installments. You make the request for an installment agreement when you file your completed tax return using Form 9465, "Installment Agreement Request." "Offer in compromise": If you can't afford to pay all you owe in taxes, even in installments over a period of years, you may be able to work out a settlement with the IRS. The IRS recently expanded its "Offer in Compromise" program, in which taxpayers in tough financial situations can offer to settle for less than they owe. Offers are submitted using IRS Form 656, "Offer in Compromise." A loophole offers an extra month to pay up: If all you need is an extra month or so to come up with the cash to pay your tax bill, there is a way you may be able to get a short reprieve without being subject to interest or penalties. All you need do is take the IRS up on its offer to calculate your tax bill for you. If you're eligible for the offer, fill out your tax return, stopping short of computing certain totals, and send it in by April 16. The IRS will compute your tax and send you a bill for any tax owed. If you pay within 30 days of the notice, you won't be assessed any penalties or interest. To take advantage of the loophole, your taxable income must be less than $100,000 and you can't itemize deductions. The full list of eligibility requirements and step-by-step instructions are contained in IRS Publication 967, "The IRS Will Figure Your Tax." Retirement account contributions: If you hope to contribute to an Individual Retirement Account, the final deadline for 2000 tax-year contributions is April 16, even if you obtain a filing extension. The deadline is more flexible for self-employed retirement plans. Contributions to Keogh or Simplified Employee Pension (SEP) plans can be made up until the due date of your return, which can be later than April 16 with a filing extension. Estimated tax deadline: For self-employed workers and other individuals who need to make quarterly estimated tax payments to the IRS, April 16 also is the deadline for making the first installment for 2001.