Tax Deadlines — and some advice if you’re in trouble
A few tax deadlines to be aware of in the next few days:
Annual income taxes must be postmarked April 17 this year. This year, the traditional deadline date, April 15, falls on a Sunday, and Monday, April 16, is a holiday celebrated in Washington, D.C. (Emancipation Day). From IRS.gov:
According to federal law, District of Columbia holidays impact tax deadlines in the same way that federal holidays do; therefore, all taxpayers will have two extra days to file this year. Taxpayers requesting an extension will have until Oct. 15 to file their 2012 tax returns.
Also from the IRS Web site:
Individuals making $50,000 or less can use the Volunteer Income Tax Assistance program for free tax preparation and, in many cases, free electronic filing. Individuals age 60 and older can take advantage of free tax counseling and basic income tax preparation through Tax Counseling for the Elderly. Information on these programs can be found at IRS.gov.
For tax law questions or account inquiries, taxpayers can also call our toll-free number (7 a.m. to 7 p.m. local time) or visit a taxpayer assistance center, the locations of which are listed on IRS.gov.
April 17 will aslo be the deadline for quarterly taxes, including:
- Estimated income taxes
- Sales tax
Do you owe federal income tax?
If you’re in trouble on your taxes, you should know about an IRS initiative that doesn’t seem to be getting a whole lot of publicity — the Fresh Start Initiative.
The Fresh Start Initiative’s penalty relief plan will help taxpayers who have been unemployed for more than 30 days to avoid failure-to-pay penalties by extending to them a six-month grace period. This applies to the 2011 tax year. You must pay the sum in full by Oct. 15, 2012 to avoid paying the penalties. To qualify, you must fit one of these criteria:
- Wage-earner who has been unemployed for 30 consecutive days during 2011 (or in 2012, up to April 17).
- Self-employed individual who experienced a 25% (or greater) reduction in business income in 2011 due to the economy.
Your income may not exceed $200,000 if you file “married, filing jointly” (or $100,000 if you file as the head of the household). Your 2011 balance due may not exceed $50,000. To qualify, you must complete a Form 1127A.
The program also makes it easier for some people to qualify for streamlined installment agreements. The threshold for using an installment agreement without having to supply the IRS with a financial statement has been raised from $25,000 to $50,000. An installment agreement is an option for you is you can’t pay your taxes by the due date. Penalties are reduced, however the interest still acrues on the amount owed. To qualify, you must agree to monthly direct-debit payments. You can set up an installment agreement by going to the IRS’s Online Payment Agreement site and following the instructions.
OFFER IN COMPROMISE
An earlier prevision of the Fresh Start Initiative expanded the bredth of the Offer in Compromise provision. An Offer in Compromise lets you settle your tax debt for less than the amount you owe if you fit a certain set of criteria including your ability to pay, income, expenses and aset equity. The IRS warns that this program is not for everyone and urges you to check your tax pro’s credentials before going down that road. The full information is here if you’d like to peruse it.