Things to Do or Know in April ... Ask TaxMama ... April, 2004

Ask TaxMama.Com
Tax Information With A Mother's Touch

Published by Eva Rosenberg, MBA, EA
Volume 6, Issue 253 April 2, 2004


	Things to Do or Know in April
	Letting Attorneys Bid On Your Business
	March Tax Watch Columns
	Already On Installment
	Accepting Credit Cards, Checks or Payments Online


	Ten Ways to Avoid IRS Scrutiny


	Tax and Lawyer Humor and Quotes
	The Oldest Profession

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» OK, you're on extension. So what now?-

» Finish It Up -

You've been waiting for various missing bits of information? If you don't want to file an extension, call them and, even if they're not ready, get an estimate of what they expect your income or expense to be. You may use reasonable estimates on your tax return - if you can get solid information. (Otherwise, get an extension and WAIT.) Remember, if you file now, so you can get your refund, when the real information comes to you, you may have to amend your tax return.

For quick look-up info, if you can't find it by doing a search of TaxMama.com, use these resources:

» Finish It Up Online -

These are the best online tax preparation sources. They've all been around for years, have deep pockets in the event of errors, strong security for your sensitive information - and they are eminently reliable.

TurboTax
TaxBrain - use coupon code TXM334 to get discount
Complete Tax
H&R Block
TaxCut Software - do it yourself

» Need to File Prior Years?

This is the only place I've found online with a company I know you can rely on. The prices are very reasonable for the prior year software. too.

TaxCut Software - has software for prior year returns (Click on the link to 'Back Editions")

» Review Your Current Withholding

You've just done your tax return. If you have a big refund, you may want to reduce your payroll deductions and use the money during the year.
On the other hand, if you're owing, you're hurting. Don't put yourself in that position again next year.

For an easy guide to help you update your withholding Click here.

» Can't Pay The Tax? -

Don't worry, the extension you filed on April 15th will let you avoid late filing penalties of FIVE PERCENT PER MONTH! You'll only need to pay the small late payment penalty 1/2 of a percent per month. Interest rates are only 5%. Lower than many of your credit cards. So don't stress over it.

» Want To Pay By Credit Card? -

OfficialPayments.com will apply your payment to IRS, state and local taxes for most areas.

Remember - using these services, the tax agency doesn't pay the merchant fees - you do. It will cost about 2.49% of the taxes you pay. (They call it a convenience fee. That's for the convenience of the tax agency, not you.)

Alternative #1 - Use your credit card checks (you get all those things in the mail, daily, right?). Read the fine print. See what they are going to charge you. See if you can get a no-transaction-fee check. Also, see if you can get reduced or 0% interest on the charge. You might still get your mileage points. Ask.

Alternative #2 - Call your credit card company and request a cash advance to be deposited into your account. It will take a week or 10 days, so do it now. If you cajole sweetly, you might get it without transaction fees. Also request low or 0% interest. Again, ask about the mileage points.

» Remember To Pay The Tax -

If you e-filed your return and you have a balance due - remember to send in your check. I know, it's easy to forget. But don't.

Oops, You Can't Pay the Tax?

If you can't afford to pay it? There are two ways to go:

IRS suggests that you file Form 9465 Installment Agreement Request. You may want to think about it. After all, there is a $43.00 fee for an installment agreement (IA). Even though filing for the IA will cut your late payment penalties in half - to 1/4% per month - that saves you $300/year on a $10,000 balance. Toss in the savings on the intererst on the penalties (yes, IRS charges interest on penalties), and you save about $7.50 - $15.00 more. Worth doing. [Note: In the form, you give IRS your bank account numbers and the right to attach your funds if you're late or miss a payment. IRS used to just levy the bank account when you were late. Lately, though, they've given you a chance to make it good.)
Don't file the installment agreement (IA). Just send IRS as much as you can afford with your 1040-V payment voucher in April. Then save up and send them money every time IRS sends you a notice about your balance due. If you expect to have enough to pay the balance off in about 6-9 months, this may be a little cheaper and less invasive than requesting the IA. You'll still be paying interest on the penalties and taxes, but the interest on the extra $150 - $225 worth of penalties is only $3 - $5. So, get some perspective.

» Review Your Year 2000 and 2001 Tax Returns Now

Once you file a tax return, you have three years from the date you filed to amend it and collect a refund. So,if you filed your 2000 return, thinking you're going to correct it later; or you've learned about deductions or credits you've missed in the past, now is the time to file that extension. Your window of opportunity to get that refund will expire on April 15th, if you filed in April, 2001. (You still have until August 15, or October 15th if you used one or two extensions in 2000.) Remember, it's worth the trouble. IRS interest rates on refunds due from 2001 range from 9% to 5% dependening on the year. Much better than your investments have been doing since March 2000...

Use Form 1040X to file.

Note, check your state, too, to see if you've missed anything.

TaxCut Software - has software for prior year returns (Click on the link to 'Back Editions")

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