Money Matters: Oct. 15 extended tax deadline looms — are you ready?
For the more than 10 million taxpayers, including small business owners, who requested extensions to file their 2008 returns, the Oct. 15 deadline is nearly upon you. Be it from disorganization, procrastination or lack of money, don't suffer the penalties the IRS could exact on you.
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For the more than 10 million taxpayers, including small business owners, who requested extensions to file their 2008 returns, the Oct. 15 deadline is nearly upon you.
Be it from disorganization, procrastination or lack of money, if you aren’t ready and willing to file and pay, you will face penalties and interest charges that could increase your tax bill by 25 percent or more.
For those meeting the deadline and who did file an extension, you still have to pay interest on any 2008 tax that was not paid by April 15, 2009.
Knowledge is power
Unfortunately, the IRS knows there will still be people who are not ready to pay their taxes. If you owe the government $25,000 or less in taxes, penalties and interest, you can apply to set up an installment plan for a series of monthly payments over time. To do this, you can download and complete an Installment Agreement Request (IRS Form 9465) or use the Online Payment Agreement Application. According to the IRS, there is a one-time installment agreement fee of $105, and additional changes to the agreement will cost $45. The IRS suggests basing the monthly payment amount by what you are able to pay regularly without defaulting. Balances can be paid off earlier than the time agreed upon without penalty. And, if you can pay your entire bill within 120 days, the agency says you can avoid the fees for setting up an agreement. To arrange for this option, call the IRS at 1-800-829-1040.
If filers owe the government more than $25,000, they need to complete Form 433-F, Collection Information Statement, which asks for information including assets, liabilities and income.
And, if you don’t file a return? The IRS will assess penalties, increasing the total amount you owe. The IRS also will file a substitute return on your behalf, and will not include any exemptions or expenses you might be entitled. Once the substitute return is filed, the IRS will initiate collection procedures, which may include a federal tax lien against property, levy on wages or bank accounts.
Getting organizational help
If you feel disorganized about your business and don’t have good records, tax experts suggest getting help, either from software or hiring someone else to help you keep your accounts year-round. Even one low-tech alternative is to set up folders by month and drop invoices in there.
If your papers are so disorganized that you have many missing checks or invoices, or can’t figure out which receipts go with which payments, do the best you can, experts say. But be up-front and tell the IRS you’re filing an estimated return. Tax experts said you can always amend it in the future.