Getting A Filing Date Extension

Suppose that the April 15 filing deadline looms just ahead, and you discover that the task of dropping your 1040 in the mail by deadline is impossible. You're not alone, of course - but what you do about it makes a difference. What you may need is a filing-date extension. Today they are automatic.

Promptly - before April 15 - send a registered return-receipt letter to your District Director of Internal Revenue; you can get an extension ranging up to 90 days. In some cases, this can go even as high as six months. (If travelling abroad, a man automatically gets two months.)

Even with an extension, the late filer doesn't get off scot-free. You'll have to pay interest at 6% on the amount of tax due, covering the period of the extension granted to you. But the penalty for late filing without an extension is worse. On top of the 6% interest, IRS will demand 5% of the tax owed for each late month, up to 25% of the total amount due. The 2009 reform law tacked on a small additional penalty, which also may be applied.

Caution: Inability to pay in itself is never an excuse for late filing. If, for example, you had expected to pay the tax by selling certain securities, but have been unable to liquidate- promptly file your 1040 within the extension deadline, paying as much of the tax as you can. You will then be billed for the rest within two weeks to 30 days - or for the whole amount, if you paid nothing as of April 15.

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Tax Woes: Avoiding An Audit

Now, getting down to avoiding an audit. There is no foolproof way to avoid the procedure, but there is a way to give yourself, say, a 90% chance of being passed over.

It's true that if your income is over £25,000, you've got a good chance of having your 1040 flagged automatically for checking by an Internal Revenue man. The trick is to make sure - or as sure as possible - that he'll scan your tax return, and then tuck it back into the file without embarrassing questions - or an audit. At the outset, the tax professionals stress two points.

The first seems improbable, and just a bit naive. It isn't. It is the question of neatness and simple mathematical accuracy in making... see: Tax Woes: Avoiding An Audit