The tax return extension deadline is fast approaching but there is still plenty of time to file taxes. Despite the fact you may not have the entire amount you owe at this time, it’s better to get the process started and avoid late payment penalties.
So far this year the IRS has received 142 million tax return, 122 million of which have been submitted electronically. You can do it using the IRS Free File, commercial brand such as TurboTax or H&R Block, and even most professional tax preparers are required to file electronically.
The IRS has reported that there are still over 4 million taxpayers who requested extension to file tax returns have yet to file. The agency suggests the taxpayers file electronically, which is faster, secure, and if you expect a refund you can request a direct deposit and have it in your account in as little as 21 days.
Before filing your income tax return, make sure to check for the tax benefits that you may qualify for. There are some that taxpayers often ignore, they are:
- Education credits through the American Opportunity Tax Credit.
- The Earned Income Tax Credit for low income families.
- Savers credit for low income individuals contributing to their retirement plans.
- Benefits for married couples that are now extended to same sex couples.
If you owe taxes and don’t have the means to make the payment the IRS offers many ways to settle tax liability. Struggling taxpayers typically postpone filing taxes until the last moment. It’s important to remember that if you have a tax liability you are required to pay interest on that amount. Additionally there are penalties for filing late. It is recommended to file before a deadline and if you can’t pay the entire amount you owe pay as much as you can afford at the time. Then contact the IRS and set up some form of payment plan of those liabilities.
There are several ways to qualify for a relief program when experiencing economic hardship:
- A payment agreement can be set up with the IRS online.
- Monthly agreement can be set up for up to 72 months.
- A short extension to pay can potentially be granted.
- Request payment agreement by filing Form 9465.
- Taxpayers in dire situation may qualify for offer-in-compromise, which typically settles the tax obligation for the lesser amount.