Many taxpayers only turn to their tax returns on the last minute, rushing through the process to meet the April 15th deadline. Tax filing is a tedious and serious process that needs sufficient time, resources, and planning. Those who file their returns in a rush risk serious tax flaws, may fail to claim tax credits and deductions they are eligible to or miscalculations. There are however, several safer options that you can use to ensure that your taxes are properly filed.
Apply for An extension: Taxpayers are allowed by the IRS to apply for a tax filing extension of 6 months by filing the IRS Form 4868. You can use this period to organize and file your return but remember; the filing extension doesn't extend the tax payment deadline. This means that you have to estimate and pay all the tax owed by the due date. Failure to do this will lead to the IRS interests on the amount due as well as late payment penalties.
File Electronically: Over 70% of taxpayers file their taxes electronically. It is even more efficient and highly recommended if you are expecting tax refunds since electronically filed taxes are processed faster. You can get your refunds within two weeks.
Pay with Your Credit Card: If you have a credit card whose interest rate is 10% or less, and you don't have the cash to pay your tax debt with, then the credit card payment can be a perfect solution. There are however, some cases when paying your taxes with the card can be counterproductive, especially if their rates exceed the IRS interests and penalties. Don't forget you have to pay a "convenience" fee of 2.4%, even though some credit card companies pay the fee for the taxpayers, and still earns them some rewards for using their card to make payments.
Other Options: There are times when all the listed alternatives may not be possible. If you cannot pay your taxes, try to file the return by the tax day or apply for an extension. This will save you from the late filing interests and penalties. You can then talk to the IRS for alternative payment options like Installment Agreement payments over the years, Offer in Compromise, amongst others.
There are several requirements that have to be met to qualify for any of the other payment options. Consider talking to a tax professional to boost your chances of qualifying. The most reasonable thing to do however is; plan your taxes early, pay and file before the deadline.
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