Filing an Extension: Step by Step

A wise taxpayer knows his limits.  With exactly one week remaining to file your income taxes, you should know by now if they’re going to be done on time.  If you can’t get all the figures together and you can’t do a decent job on your taxes right now, maybe you need to file an extension.  Here’s how:

  1. Visit the IRS Free File web page
  2. Under “Choose a Free File Option,” click on “Browse the list of Free File companies” (this will take you to a comprehensive list of non-IRS Free File companies)
  3. Choose one of the Free File companies and this will lead you away from the IRS website — click on “Leave IRS Site”
  4. Find the Free Extension link and follow the instructions; it should take no more than 5 minutes

The beauty of doing this electronically is you get an email confirmation, no stamp, no paper.  But you can still do it the old-fashioned way by filling out a paper Form 4868.

Remember, an extension will not provide you with unfettered tax relief.  It gives you an additional six months to file, but it does not give you additional time to pay.  Interest and failure to pay penalties still apply.  Good luck!

Time is Running Out on the Payroll Tax Extension

Further payroll tax relief may have to wait.  Most Americans who have been following the story probably thought a two-month extension of the payroll tax cut was the best that could be arranged for now and it was a done deal.  In fact, after the Senate approved the measure on Saturday, they left Washington for their holiday break.  But not so fast — it still had to get past the House in today’s vote . . . and it didn’t.

Today the House voted 229-193 in opposition to the two-month extension.  This has the effect of kicking the measure back to the Senate, but Senate Majority Leader, Harry Reid, refuses to continue negotiations on a long-term deal until the House approves the preliminary one.  Here is the way he spins it:

I have been trying to negotiate a yearlong extension with Republicans for weeks, and I am happy to continue doing so as soon as the House of Representatives passes the bipartisan compromise to protect middle-class families, but not before then.

~ Senate Majority leader Harry Reid, D-Nev

If something isn’t done before the end of the year, then the payroll taxes will go up by 2 percentage points in January and nearly 2 million people could lose unemployment benefits.

Extension on CA State Taxes Ends October 17th

The California Franchise Tax Board (FTB) issued a news release on Friday reminding Californians of the extended tax return deadline and also siting some interesting statistics.

Like the IRS, the California tax authority does cut some slack for procrastinators. And like the IRS automatic extension, the California version also comes to an end on October 17th. Sometimes the tax relief most needed is just some more time. The FTB tries to make it as convenient as possible to both file and pay your state taxes.

Filing CA Taxes

  • ReadyReturns (partially completed returns just waiting for the taxpayer to complete online)
  • CalFile free e-file program
  • other free or fee-based e-file services listed on FTB’s website
  • view wage & income information online with MyFTB Account

Paying CA Taxes

And now for the statistics. This year over 1.5 million Californians requested an automatic extension and will have to file by the October 17th deadline. This actually eases the burden on the state in April by spreading out the work a little more evenly throughout the year. By now California taxpayers have filed more than 14.7 million personal income tax returns of which 11.7 million were e-filed. Also, the state has issued 9.5 million refunds totaling $8.1 billion.

Small Business Health Care Tax Credit

The IRS recently released a special edition tax tip of interest to small business owners who may be struggling to continue health care coverage for their employees. A special tax credit is available to employers that pay at least half of the premiums for employee health insurance coverage under a qualifying arrangement. To qualify for the credit, the employer must have 25 or fewer workers with average income of $50,000 or less. The maximum credit for eligible small business employers is 35 percent of premiums paid. The credit may be claimed using Form 8941.

Even though many standard filing deadlines have passed for 2010 taxes, the IRS points out that the Small Business Health Care Tax Credit may still be available subject to the following deadlines:

  • businesses affected by certain natural disasters (deadline is October 31)
  • business entities such as sole props, partnerships, and S-corp shareholders who report their income on Form 1040 and who requested an extension (deadline is October 17)
  • tax-exempt organizations that file on a calendar year basis and requested an extension (deadline is November 15)
  • business that have already filed can still go back and claim the credit by filing an amended return

More on Irene

Today the IRS announced that it is providing tax relief to individuals and  businesses affected by Hurricane Irene. So far the IRS is extending relief to certain counties and municipalities in New Jersey, New York, North Carolina, and Puerto Rico.  You can visit the IRS website to see if your specific location is on the list.  And keep checking back because FEMA will continue its damage assessments, and the IRS will most likely add to this list.  If you live in one of the affected counties, then you will be able to postpone filing and paying certain taxes.  Also, if you receive a penalty notice, you may call the IRS and they will abate the penalties and interest.  If your tax preparer lives in one of the affected areas but you do not, you may be granted an extension as well.

IRS Extends OVDI Deadline Due to Hurricane Irene

The deadline for disclosing your offshore accounts under the IRS’ amnesty program has been extended from August 31st to September 9th. Interestingly, the extension applies to everybody, not just those who may be affected by the destruction of Irene. Various forms of tax relief are typically offered to disaster victims and details are typically postedhere. The IRS has not yet updated this page to reflect the recent activity of Hurricane Irene, but keep checking back because information is sure to come. The IRS normally has to assess the situation and determine who should qualify for relief.