Taxes and Tax Information

Millions of people file tax return extensions every year. The tax filing deadlines can rush up on your quickly. Fortunately, filing an extension isn’t particularly difficult. For individuals, there are two available extensions.

Automatic Extension

What do you do if April 15th is approaching and you simply can’t get your taxes done? The IRS allows you to file a request for a four-month extension to file your tax returns. Simply file form 4868 and you will automatically be given until August 15th to get your return in.

Second Extension

What do you do if August 15th is quickly approaching and you still can’t get your returns together? You can file an additional request for an extension to file your tax returns. Unfortunately, the IRS isn’t going to automatically grant your request. Instead, you have to show the following:

1. The reason for requesting the extension,

2. The particular tax return for which the extension of time to file is desired,

3. The tax year to which the extension applies,

4. The length of time needed for the extension, and

5. Whether another extension of time to file has already been granted for this tax year.

If you can provide credible information, the IRS will grant you an additional extension for two months. To request the extension, you must file form 2688.

Failing To File

Failing to file a tax return or application for extension is a bad move. Penalties can be as high as 5% for each month your return is late. The penalty does max out at 25% of the tax due, but your risk of an audit or having your return red flagged increases dramatically. Filing a tax return extension is fairly simple, so you should never have this problem.

Richard Chapo is CEO of http://www.businesstaxrecovery.com - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review. Read additional tax articles at http://www.businesstaxrecovery.com/articles for more information.

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Many Americans believe that an IRS debt is a debt for life and that the tax collector can hound them to the grave. Thankfully, that is not the case and there are statutory time limits on the ability of the IRS to examine and collect taxes. Taxes do expire at some point and in some cases IRS does not get the money they were legally entitled to collect.

Basically, IRS has 10 years from the date they send out their first bill to collect the tax.
The 10 year rule does not apply to the states. Some, like California have no statute of limitations and the state tax collector can indeed hound you forever. The federal tax collector must get the cash before the clock runs out.

For tax assessments made after November 5, 1990, the IRS cannot collect the tax after 10 years from the date of the original assessment absent special circumstances. Special circumstances that may extend the statute are: a bankruptcy not completed or wherein the tax is not discharged; filing an Offer-in-Compromise; or signing a Form 900 Waiver allowing the United States additional time to collect the tax. Also, it is possible for the government to sue to reduce the tax claim to judgment before the 10 years expires.

If you never file a tax return, there is no statute of limitations on IRS requiring you to file, but as a matter of policy, IRS generally only requires non-filers to file the last 6-7 years. If IRS files for you by doing a Substitute-for-Return (SFR), they have 10 years from the date they file the SFR to collect from you. If a Federal Tax Lien is on file against you, it expires and becomes void if the underlying statute expires.

You can find out when the statute expires on your tax bill by requesting a Record of Accounts (ROA) from IRS for each tax year you owe. If you can’t afford to pay the tax, your account might be eligible to be put in a “temporary hardship” status. It may be possible to “ride out” the statute in hardship if you qualify. An impending statute might also be a beneficial factor in an Offer-in-Compromise.

If you have a refund coming to you, you only have 3 years from the due date to collect your refund. If you file 3 or more years after the due date, the refund is lost. In some cases you can peruse a refund beyond the three years. If you full pay the tax, you can file a claim for refund within 2 years of the payment. If your claim relates to a bad debt or worthless security, you have 7 years to make a claim.

The flipside to the 3 year refund rule is that IRS only has 3 years to examine a filed return by audit in most cases. Now, the tax code is complicated and there are exceptions to these rules. If you have committed fraud or tax evasion, there is no statute for audit. There is also a 6 year rule for audit in cases of “substantial omission” of 25% or more in income. But for most folks, the three year statute will apply on audits.

Websites that can help you research these issues are: www.irs.gov, www.naea.org, www.exirsman.com, www.taxattorney.com, and www.etaxes.com. I do not recommend dealing with IRS on your own. You should get help from a tax pro if you have a tax collection or audit issue. Don’t hire some company you saw on a TV commercial, hire a flesh and blood person or reputable firm. A good CPA, Enrolled Agent (EA), Accredited Tax Advisor (ATA), or Tax Attorney can be invaluable. If you want to call IRS yourself, they can be reached at 1-800-829-1040.

James Robert Coleman, E.A., A.T.A.
Enrolled Agent & Accredited Tax Advisor
Member: National Association of Enrolled Agents
Former IRS Revenue Officer, GS-11
http://www.exirsman.com

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It may not be high on the list of wedding planning activities, but there are a few simple steps that can help keep tax issues from interrupting your newly wedded bliss. If you recently married, check out your new tax situation. You might save money or even prevent the problem of a missing refund check.

The first things to handle are changes of name and address. Later, as tax season approaches, consider whether or not you’ll itemize deductions, which tax return form is right for you and what filing status you’ll use.

No one should delay the cake cutting or honeymoon because of taxes. But here are some helpful hints for later:

Use Your Correct Name

You must provide correct names and identification numbers to claim personal exemptions on your tax return. If you changed your name upon marrying, let the Social Security Administration know and update your Social Security card so the number matches your new name. Use Form SS-5, Application for a Social Security Card.

Change of Address

If you or your spouse has a new address, notify the U.S. Postal Service so that it will be able to forward any tax refunds or IRS correspondence. The Postal Service will also pass your new address on to IRS for updating. You may also notify to notify the IRS directly by filing Form 8822.

Refund Checks

Each year, the Postal Service returns thousands of tax refund checks as undeliverable, usually because the addressee has moved. Notifying both the Postal Service and the IRS of an address change in a timely manner can help ensure the proper delivery of any refund checks. To check the status of a tax refund, go to the IRS web site and use the “Where’s My Refund?” service.

Changing Filing Status

Your marital status on December 31 determines whether you are considered married for that year. Married persons may file their federal income tax return either jointly or separately in any given year. Choosing the right filing status may save you money.

A joint return (Married Filing Jointly) allows spouses to combine their income and to deduct combined deductions and expenses on a single tax return. Both spouses must sign the return and both are held responsible for the contents.

With separate returns (Married Filing Separately), each spouse signs, files and is responsible for his or her own tax return. Each is taxed on his or her own income, and can take only his or her individual deductions and credits. If one spouse itemizes deductions, the other must also.

Which filing status should you select? It depends entirely on your specific situation. You should consider sitting down with a tax professional to make a determination.

Richard A. Chapo is with http://www.businesstaxrecovery.com - recovery of business taxes through tax help and tax relief. Visit http://www.businesstaxrecovery.com/articles to read more business tax articles.

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