IRS Eases Deadline for Travelers

QUESTION: I am on a temporary assignment in Central America and don’t expect to be back in the United States before April 15, when my tax return is due. I don’t have an accountant, and I can’t seem to get anyone on the phone at the IRS who can tell me whether there is any relief for people under these circumstances. I don’t want to pay a penalty--especially because I think I owe the government several hundred dollars already.--L. A. D.

ANSWER: You have two options. If you think you’ll be back in time to mail your return by June 16, don’t do anything. The IRS will extend the filing deadline to that date if you’re out of the country at filing time. Just attach an explanation to your Form 1040 when you finally file.

There is a down side to that approach. If you owe the government money, as you suspect you do, you will be charged interest on the total amount due. Currently, the interest rate is 10%, compounded daily. It is computed from the return’s due date until the date that payment is made.

If your stay will drag on beyond June 16, or if you don’t want to risk paying unnecessary interest, get in touch with the IRS or with a tax preparer quickly and have them send you an IRS Form 4868. Fill it out, estimate what your tax bill will be and mail the form and a check for the estimated tax to the IRS service center where you will eventually send your return--all by April 15. This gives you an extra four months. But it doesn’t excuse you from interest on the tax still owed in the event that your estimated tax payment doesn’t fully cover the bill.

You aren’t entitled to an automatic extension if you file the IRS’ simple return--1040EZ--or if you ask the agency to compute your tax for you.

After you get the four-month extension, it isn’t nearly as easy to get additional time. Losing records in a fire is one excuse that the IRS has bought in the past.

But having to be out of the country may or may not be acceptable--it all depends on how good your reason is in the IRS agents’ eyes. If you find it necessary to try, you’ll have to get and file another piece of paper--Form 2688.

Q: In a recent column on U.S. savings bonds, you failed to mention whether there is any limit on how many bonds someone can buy in a year. Is there?--H. P.

A: There is a limit--set, say the administrators of the savings bond program, so no individual can gain control over the public sector fund-raising program.

Assuming the bonds are registered in one person’s name, the limit on Series EE bonds is $15,000 in any one calendar year. The $15,000 applies to the amount you pay for the bonds, not to the face amount, which is double the issue price.

If you co-own the bond with someone, the annual purchase limitation is doubled--to $30,000 (issue price). The limits apply only to the purchase of Series EE bonds, the type that school kids and employees--who buy them through payroll deductions--are most familiar with. These are purchased for half of the bond’s denomination and appreciate to their full face value over 10 years.

There aren’t any purchase limits on HH Series bonds, which are purchased not with cash but with Series E or EE bonds or savings notes or with the proceeds of matured Series H bonds. HH Series bonds, unlike the EE variety, are issued at face value and pay interest semiannually.

Debra Whitefield cannot answer mail individually but will respond in this column to financial questions of general interest. Do not telephone. Write to Money Talk, Business section, The Times, Times Mirror Square, Los Angeles 90053.