Missed the Tax Deadline? Here's My Advice

Yesterday was the deadline to get your tax return filed. Hopefully you filed your taxes right on time and are currently relaxing in post tax season glow. If not, here is my advice on how to get your taxes taken care of without incurring excessive fees and penalties.

Don't Wait Any Longer

The best advice I can give you is not to wait any longer. Get your tax returns prepared and filed as soon as possible. If you get your return filed within the next couple of days, any penalties you’re assessed will be minor, and you may escape the penalties altogether. However, the longer you wait, the more you will end up owing Uncle Sam.

Too Late for an Extension

Unfortunately, if you did not request an automatic extension of time to file with the IRS before the deadline, you missed the opportunity to get an additional six months to file your return. Don’t even bother trying to file one now.

Be Fast, But Cautious

Although you should get your returns filed as quickly as you can, you still need to be accurate and meticulous. Mistakes on your taxes can cost you money through missed deductions, or improperly reported income, and can even invite an audit. Only claim deductions and credits that you are entitled to; make sure you include all sources of income on your return; and double check to make sure your Social Security number, address, and other personal information are all accurate. And for heaven’s sake, remember to sign your tax returns!

FTP and FTF Penalties

There are two types of penalties that the IRS can assess, Failure to File (FTF), and Failure to Pay (FTP). Therefore, even if you cannot afford to pay the taxes you owe, you should still file a return ASAP to prevent at least one type of penalties. If you don’t file or pay, the IRS will hit you with both.

Payment Options

If you do not have enough money in the bank to pay the taxes you owe, you might want to think about paying by credit card. The IRS does accept credit card payments, just be aware that you will have to pay an additional fee, as well as interest to your credit card company. Of course, that might be a small price to pay for avoiding the stress and hassle of IRS debts.

Payment Plan

Depending on how much you owe, you may be able to set up a payment plan with the IRS, also known as an installment agreement. If you owe less than $25,000, you can use the IRS' Online Payment Agreement program to submit your application. Alternatively, you should consider contacting a tax lawyer or enrolled agent to prepare the application on your behalf.

Substitute Return

If you do not file a return, then the IRS will file a substitute return on your behalf. This is not a good thing since the IRS will likely not include deductions, credits or exemptions for which you are eligible. As you can imagine, that can make your tax bill much larger than it should be. Avoid the entire mess, and file your returns, even if they are late.

State Tax Returns

Like I mentioned in last week's Questions for The Tax Lady entry, some states, including California, will automatically give you an extension if you do not file before the deadline. However, every state has different rules for late filing and payments, so be sure to contact your state’s tax agency to make sure that you are compliant.

Professional Help

Remember, you always have the option to hire a professional to help get your return filed, and setup a payment plan with the IRS. Just keep in mind that many tax preparation offices have seasonal hours, so remember to call and make an appointment as soon as possible.

Where to Get Your Tax Day Freebies and Discounts

Today is the deadline to get your federal tax returns filed, which also means companies are offering Tax Day promotions. Go on and get your free stuff!

From CBSnews.com:

HydroMassage:

HydroMassage locations nationwide will provide free massages between April 14 and April 18 to help eliminate the stress of tax filing. Get a coupon for a free message at www.hydromassage.com/taxday.htm and call ahead to schedule a session.

IHOP:

IHOP has a kids-eat-free special offer the entire month of April. From 4 p.m. to 10 p.m., children 12 and younger get one free meal with each paying adult.

Cinnabon:

Cinnabon will offer two free Classic Cinnabon Bites on April 18 from 6 p.m. to 8 p.m. as part of its Tax Day Bites promotion.

California Tortilla:

California Tortilla is giving customers free chips and cheese (queso) with a purchase on April 18 because "you have to pay the big cheese."

More here

Tea-Party Activists Stage Tax-Day Rallies

While some taxpayers were rushing to get their returns filed last Thursday, others attended tea-party rallies across the country to show their dissatisfaction with the American tax system. According to the Wall Street Journal, the organizers chose the tax deadline to hold rallies in order to highlight “onerous taxes and a bloated federal government.”

The activists protested Democratic policies and displayed varying attitudes toward prominent Republicans. Some groups invited marquee conservatives, such as former Republican House Speaker Newt Gingrich, who addressed around 500 people in Austin, Texas.

Other organizers refused to invite politicians of any stripe, reflecting the deep distrust many in the movement feel toward elected officials.

In Wisconsin, several tea-party groups protested a decision to let former Republican Gov. Tommy Thompson address a rally in Madison. Saying it was "time for new voices and new faces," Mr. Thompson used his speech to announce that he would not challenge Wisconsin Democratic Sen. Russ Feingold in his bid for re-election.

The rallies in town squares and hotel ballrooms from Philadelphia to San Diego came a year after a similar spate of April 15 protests put the small-government, anti-tax movement on the national map.

Continue reading at WJS.com…

Tax Day 2010: How the Income Tax Put Al Capone behind Bars

From the Huffington Post:

As this year's tax deadline approaches, let's skip the usual grumbling and look at the bright side: Income tax has helped the government put some of the country's most notorious criminals behind bars.

In 1931, when Al Capone was convicted of income tax evasion and sentenced to 11 years in prison, the legendary gangster complained that he got a raw deal.

"I've never heard of anyone getting more than five years for income tax evasion," said the man known as "Scarface." "It's a blow to the belt."

At the time, Capone's sentence was by far the stiffest ever made in a tax-evasion case. It put the Chicago mob boss forever out of business and crippled his criminal enterprise.

A reasonable argument can be made that Capone was punished for his long list of perceived and actual crimes, not just for his failure to pay income tax. The income-tax charge wasn't the most precise weapon for bringing Capone to justice, but it was the quickest and surest, and the government preferred not to waste time.

Today, while Capone remains American history's most iconic gangster, his greatest legacy may be his punishment. Tax cases are used routinely to go after suspected criminals--including drugs dealers, spies, embezzlers and, most recently, terrorists--who might otherwise escape punishment. In today's cases, as in Capone's, a quick prison sentence is often deemed more important than a lengthy one, in order to prevent future crimes.

Questions for the Tax Lady: July 20th, 2009

As I mentioned last Monday, I am now doing a weekly feature on my blog titled “Questions for the Tax Lady.” Throughout the week, I am going to gather questions from friends and followers of mine on Twitter, MySpace, and Facebook that I will answer in this new weekly feature. In addition to answered questions asked of me directly, I also found a few other users on Twitter who posted random tax questions. Check out the questions and answers from last week below, or click one of the links to ask me your own question!

Question #1: How do I get an IRS levy released?

The IRS must release your levy if ANY of the following occur:

1. You pay the tax, penalty, and interest you owe (please see Full Pay Service).

2. The IRS discovers that the time for collection (the statute of limitations) ended before the levy was served (please see Tax Account Review).

3. You provide documentation proving that releasing the levy will help the IRS collect the ta owed.

4. You have an Installment Agreement, or enter into one, unless the agreement says the levy does not have to be released (please see Installment Agreement).

5. The IRS determines that the levy is creating a significant economic hardship for you (please see Currently Not Collectible).

6. The fair market value of the property exceeds such liability and release of the levy on a part of such property could be made without hindering the collection of such liability.

For more information check out this article on RoniDeutch.com.

Question #2: What are the tax legalities of an eBay business?

An eBay business should be treated just like any other home business. In fact, all income you make from eBay should be reported to the IRS, regardless of the amount you make. However, just like having a garage sale, you will only need to report the money you make if it is in fact income. Therefore, if you bought a computer for $1000 and sold it on eBay (or at a garage sale) for $100 then it is not income since you did not make any profit. However, if you make and sell products on eBay for a profit, then you should report the income to the IRS.

Although many people fear that eBay is required to send the IRS data for its users, their spokesperson Chris Donlay says this is not the case. “The IRS would need to provide us with a subpoena for a specific individual before we would provide any data. I don't believe this is something that would be typically done for a routine audit, though it theoretically could happen.”

However, just because eBay is not reporting the income does not mean it is ok not include it on your tax return. Remember that the IRS now has the ability to monitor bank accounts and if you are making regular deposits then they might get suspicious. To learn more about eBay and tax issues, check out this interesting article I came across this weekend.

Question #3: When did April 15 become tax day?

According to Wikipedia:

The {tax} filing deadline for individuals was March 1 in 1913 and was changed to March 15 in 1918 and again to April 15 in 1955. Today, the filing deadline for U.S. federal income tax returns for individuals remains April 15 or, in the event that the 15th falls on a Saturday, Sunday or holiday, the first succeeding day that is not a Saturday, Sunday or holiday.

Question #4: Is Schaumburg, IL Restaurant Sales Tax the Highest in the Nation at 12%?

Yes, the 12% sales tax levied on foods and beverages in Schaumburg, IL make it the highest sales tax rate in the nation. In addition to the state’s general sales tax the small tourist town also levies a 2% Village of Schaumburg Home Rule Food & Beverage Tax.

Schaumburg’s neighbor Chicago, IL has the highest sales tax rate of any major metropolitan city at 10.25%. However, these rates are based off of a relatively low state sales tax. California has the highest statewide sales tax at 8.25%, but nearly every city and town levies additional sales taxes. In fact, in the South Gate and Pico Rivera, CA the total sales tax is also 10.25%.

Tax Day Roundup: Filing Tips and Free Food

Yesterday I came across this great article from LifeHacker.com with some last-minute preparation tips for filers who are late or planning to file an extension today. They also included some information on a few tax day freebies and discounts. You can find a segment of the story below, thanks to LifeHacker.com.

Last Minute Prep Tips:

Need an extension?: If you know roughly how much you'll owe but just can't get through all the paperwork, fill out Form 4868 and send it in with 90 percent of your estimated amount due to avoid penalties and fees. Pretty sure you're getting a refund? Just send in that form, and you've got until around Oct. 15 to file your final claim.

Drop-dead, last-minute tax reducers: If you can't stand to look at how much you owe, today's probably the last day to do something about it. Grab that extension form above, unless you've got the day to yourself (or love late-night post office crowds). Then check out Consumer Reports' Last, best money-saving tax options, which includes things like Roth IRA contributions, child credits, and stimulus payments that never came.

Clean, signed, and keep a copy: That's how tax returns should be filed, as tax whiz Roni Deutch tells the Get Rich Slowly blog. Just having a proper-looking return can keep you away from an audit, but if the numbers themselves make you worry, check out GRS' list of common IRS red flags.

Tax Day Freebies and Deals:

Cinnabon Bites at mall-based Cinnabon locations from 5-8 PM.

Single-scoop ice cream from MaggieMoo's all day.

Free Taco Del Mar Taco all day with a printed coupon.

Roni Deutch Celebrating Tax Day on the Today Show

After my appearance on the FOX Business Network this morning, I stopped by the Today Show for a segment on tax trivia. Since today is tax day, Kathy Lee Gifford was out on the streets quizzing people on their tax knowledge. After they either correctly or incorrectly answered Kathy’s questions, I provided a little bit more background information on each topic. Check out the embedded video below.

Visit msnbc.com for Breaking News, World News, and News about the Economy

Hopefully, those that got their questions wrong will pick up a copy of my book, “The Tax Lady’s Guide to Beating the IRS and Saving Big Bucks on Your Taxes.”

40 Hours to Freedom

To help all those “last minute filers” out there, the Roni Deutch Tax Center™ will all stay open for extended hours today and tomorrow. Some participating locations will even stay open all night as part of our “40 Hours to Freedom” program. Check out the locations page on our website to find a location near you. If you do still need to file it is probably a good idea to call and make an appointment so that you are guaranteed a spot.

I cannot stress the point enough. Do not let tax day go by without either filing your return or filing an extension. If you ignore the tax deadline then you will be hit with interest and penalties that can very quickly add up to a decent amount of money. Additionally, this year it is especially important to file so that you can get your economic stimulus check this summer. Now, if you know you cannot file on time or you are not confident that you have all of the information to accurately prepare and file your return, then make sure you file for an extension. Check out IRS.gov for more information on extensions.