Questions for the Tax Lady: September 28th, 2009

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: Roni, I’m a self-employed taxpayer and I completely forgot about the recent quarterly payment due date. I have the money to make the payment, should I just mail it in late?

Answer: Yes. The most recent quarterly payment due date was September 15^th. However, if you were unable to get your payment in then I would recommend sending it in as soon as possible. If you are only a couple of days late then the IRS will most likely not care, but if you just ignore the payment entirely then you might incur a penalty this tax season.

Question #2: What is the difference between a Roth IRA and a traditional IRA?

The main difference between a traditional and Roth IRA is the tax implications. With a Roth IRA all contributions are made from income that you have already paid taxes on. Your contributions are not tax deductible, but you will not have to pay income taxes on future withdrawals. On the other hand, with a traditional IRA the contributions are deductible but future withdrawals will be taxed.