Late Payers Fill Out Form I-O-IRS : Taxes: Due Monday instead of today, filings may be delayed until Aug. 15, but not payments.
Procrastinators, beware! Do not let the distractions of spring obscure this painful reality: The IRS is waiting on you.
But the tax shut-ins over the weekend should find some solace in the fact that many, many other Americans are in the same fix. Although the bureau received 67.9 million returns from early birds through April 7, it expected an additional 36 million returns by the end of next week. The IRS also expects at least 5 million requests for filing extensions.
This year’s filing deadline, on Monday, is two days later than most years because the usual April 15 deadline falls on a Saturday.
You can grant yourself an additional reprieve by requesting an automatic extension, until Aug. 15, using Form 4868. But that won’t relieve you of responsibility for paying your taxes on time. Make your best estimate of how much you owe and include a check.
If you can’t pay all you owe, send as much as you can. You’ll still get the extension. And the IRS will bill you for the balance, plus interest and any penalty due. That amounts to about 16% at an annual rate so it may be cheaper to get a loan and pay on time.
You can ask to pay in installments on Form 9465. The IRS will let you know within 30 days. But, for the first time this year, a $43 fee will be added to your first payment.
Filing late, as opposed to just paying late, is really expensive. The penalty is 5% a month (an annual rate of about 60%).
The IRS is reminding filers of two changes since tax instruction booklets were published.
President Clinton signed legislation this week retroactively restoring a lapsed tax benefit for 3.2 million self-employed people. Now they can deduct 25% of their health insurance premiums, using Line 26 of Form 1040.
Taxpayers who already filed but did not claim the deduction should file an amended return using Form 1040X.
And the IRS temporarily eased enforcement of a new law on charitable contributions. You were supposed to have obtained a written acknowledgment of any contribution of $250 or more.
But because many charities weren’t accustomed to supplying acknowledgments, the IRS waived the requirement this year for taxpayers who make a good-faith effort by Oct. 16, such as writing a letter, to get one.
The average refund is up a bit this year, $1,087 versus $1,025 last year. However, the number of refunds is down 9%, to 43.6 million, because of an IRS crackdown on refund fraud that is holding up many legitimate claims involving the earned income tax credit for the working poor. The IRS expects to delay 7 million refunds this year.
“It’s been a really abysmal tax season. . . . We’ve gotten more complaints than I’ve gotten in my other 25 years in the business combined,” said John Hewitt, president of the Jackson Hewitt Tax Service in Virginia Beach, Va.
