Monday, January 17, 2011

Questions for the Tax Lady: January 17th, 2011

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: Did the IRS really extend the deadline to file this year? Does it apply to all taxpayers, or only in Washington D.C.?

Answer: Yes, the IRS did in fact extend the filing deadline until April 18, 2011. The reason for the extension is Washington DC observes Emancipation Day, which falls on April 15 this year. By law, all holidays Washington DC observes impact tax deadlines the same way federal holidays do: so all taxpayers have three extra days to file.

If you file for a 6 month extension, you will have until October 17, 2011 to file.

But remember, three extra days is no excuse to procrastinate! Get your taxes prepared and filed in a timely manner to avoid that last minute stress, and the possibility of missing the deadline!

Question: I found out I owe the IRS about $3,500 from last year. Do I have to pay it all at once or can I sign up for a payment plan?

Answer: Since your tax debt is relatively small – although it probably doesn’t feel very small to you! – you should be able to get a streamlined installment agreement. This allows you to repay your debt in monthly payments, instead of in a lump sum. You will still pay interest and penalties, so the sooner you pay it off, the smaller the financial impact will be for you.

To request an installment agreement, you can use the IRS’s online application here.

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