Don’t Miss the Deadline
If you file on time or request an extension but don’t pay all or some of the balance due by the deadline, you will incur interest on the unpaid amount and a failure-to-pay penalty. If you can’t pay the full amount, you should pay as much as possible by the deadline to minimize interest and penalties.
Get Recovery Tax Breaks
Last year’s American Recovery and Reinvestment Act created a full slate of tax breaks, which can be claimed on tax returns right now. These include:
- The Homebuyer Credit
- Making Work Pay Credit
- American Opportunity Credit
- Home Energy Credit
- New Car Tax and Fee Deduction
Most tax returns are now filed electronically – either from home using purchased tax software, by a tax professional or through Free File.
There are several reasons the IRS encourages taxpayers to file electronically. Here are two big ones:
E-file is accurate: Most available tax preparation programs check for errors and missing information, reducing the chances of delayed refunds or follow-up correspondence from the IRS.
E-file is fast: With most tax software, you can file a state tax return at the same time you file your federal return. Once a return is accepted for processing, the IRS electronically acknowledges receipt of the return. And refunds take only about half the time of a paper return. If you choose direct deposit, you will get your refund in even less time.
Choose Direct Deposit for Refunds
Whether you file electronically or on paper, your refund can be automatically deposited into the bank or financial account of your choosing. Direct deposit is faster than a paper check. If you e-file and use direct deposit, you will receive your refund even faster. Direct deposit is also more secure than a paper check since a direct deposit goes directly into your account and cannot be lost in the mail or stolen.
Split Refund: Refunds can be direct-deposited into as many as three different accounts. Most e-file and tax preparation software allow you to “split” your refund this way. Paper return filers need to file Form 8888, Direct Deposit of Refund to More Than One Account, to split a refund among two or three accounts.
Buy Savings Bonds: This year, for the first time, you can buy Series I U.S. Savings Bonds with your refund. Issued by the Treasury Department, a Series I bond is a low-risk investment that grows in value for up to 30 years.
Check for Errors
Tax software finds common errors on electronically prepared returns. However, if you file on paper, you can avoid delays in processing and follow-up questions from the IRS by:
- Double-checking all figures
- Ensuring Social Security numbers are correct
- Signing forms where required
- Attaching required schedules and forms
- Mailing returns or request extensions by the April 15 filing deadline
Electronic payment options are safe and secure methods for paying taxes or user fees. You can pay online, by phone using a credit or debit card, or through the Electronic Federal Tax Payment System.
You may also pay by check made out to the “United States Treasury” using Form 1040-V, Payment Voucher, which must be included along with your tax return. If you have already filed but still need to pay all or some of your taxes, mail the check to the IRS with Form 1040-V.
Request an Extension of Time to File
If you can't meet the April 15 filing deadline, get an automatic six-month extension of time to file by filing Form 4868, Automatic Extension of Time to File. The form needs to be submitted by April 15.
There are several way you can request an extension, including Free File or Free File Fillable Forms, through your tax professional, with tax software you installed on your computer or on paper.
An extension pushes your filing deadline back to Oct. 15. However, an extension of time to file is not an extension of time to pay. If you owe taxes, you need to pay at the time you file the extension or face a non-payment penalty.
Apply for an Installment Agreement
If you can’t pay your entire balance due, an installment agreement will allow you to pay any remaining balance in monthly installments. If you owe $25,000 or less, you may apply for a payment plan using the Online Payment Agreement application or just attach Form 9465, Installment Agreement Request, to the front of your return. You’ll need to list the amount of your proposed monthly payment and the date you wish to make your payment each month. The IRS charges $105 for setting up the agreement, or $52 if the payments are deducted directly from your bank account.
You will be required to pay interest plus a late payment penalty on the unpaid taxes for each month or part of a month after the due date that the tax is not paid.
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