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Show i The Magna TimesWeat Valley Newt, April 4, 2002 5 Need help? Tips to reduce taxes last-minu- te If youre trying to beat the tax deadline, the IRS says there are several options for help. If you need a form or publication, the IRS Web site at www.irs.gov has copies available. If you discover you need more time to finish your return, get a four-monextension with Form 4868. And if you have trouble paying your tax bill, the IRS has several payment options available. To get the automatic extension, file Form 4868, Application for Extension of Time to File U.S. Individual Tax Return, with the IRS by the regular April deadline, or make an extension-relate- d electronic payment. You can now file your extension request by phone or by computer instead of using the paper Form 4868. The extension will give you extra time to get the paperwork to the IRS, but it does not extend the time you have to pay any tax due. You have to make an accurate estimate of any tax due when you request an extension. You may also send a payment for the expected balance due, but this is not required to get the extension. However, you will owe interest on any amounts not paid by the April deadline, plus a late payment penalty if you have paid less than 90 percent of your total tax by that date. The IRS opened a special toll-fre- e phone line for extension requests on March 1. The number is Use Form 4868 as a worksheet to prepare for the call and have a copy of your 2000 tax return. You will need to enter the adjusted gross income and total tax amounts from that return to verify your identity. The system will givej'ou a jiJonfirmation number to signi last-minu- te th fy that the extension request . has been accepted. Put this confirmation number on your ' copy of Form 4868 and keep it for your records. Do not send die form to the IRS. If you call the extension line, you can choose to pay any expected balance due by authorizing an automatic withdrawal from a checking or savings account. You may also an extension request using your own tax preparation software or by going to a tax preparer. As with the phone system, computer filers must provide two figures from the previous years tax return to verify identity. If you determine that you need still more time to prepare and file your return beyond the initial four-monextension, you may be able to get two more months to file. ,.You will have to either write to the IRS or file Form 2688, Application for Additional Extension of Time to File Individual Tax Return. You must give the IRS the reason why the second extension is needed. If your return is competed but you are unable to pay the tait due, do not request an extension. File your return on time and pay as much as you can. The IRS will send you a bill or notice for the balance due. You may also request an installment agreement by completing Form 9465, le th Installment Agreement Request," either when you file the return or when you get the bill. The IRS will charge interest and penalties on the unpaid balance. Those who cannot pay the full tax due may qualify for an installment payment plan. The IRS offers a streamlined approval process ifthe amount due is not more than $25,000 and the taxpayer will peripay. it within a od These agreements do not require' collection managers five-ye- " ar approval, and do not involve the filing of liens. You may ask for an installment plan when you file by attaching Form 9465, Installment Agreement Request, to the front of the tax return, listing the proposed monthly payment amount and date. You may also choose to conveniently pay from your bank account each month through an automatic withdrawal program. There is a $43 fee for setting up the installment agreement. Taxpayers will also pay interest, compounded daily, plus a late payment penalty. This penalty, usually 0.5 percent of the balance due per month, drops to 0.25 percent when the IRS approves the agreement, if the taxpayer filed the return on time and did not receive a levy notice. Besides possibly qualifying for this reduced late payment penalty, people who cannot pay the taxes owed have another reason to file on time to avoid the late filing penalty of five percent per month of the balance due. Sending as large a payment as possible with the return will lessen any interest and penalty charges. The IRS Web site at www.irs.gov has an interactive feature to help taxpayers determine their eligibility for an installment agreement and to download related forms. Form 9465 is also available by calling toll free 1 or from IRS TaxFax. From a fax machine, call (not a toll-frand number) request item 14842 by return fax. ee 10 ways to avoid problems Looking for ways to rush avoid the for doing your taxes? The IRS offers these tips: last-minu- te 1. ORGANIZE YOUR TAX RECORDS. Tax preparation time can be significantly reduced if you develop a system for organizing your records and receipts. Start with the income, deduction or tax credit item? that were on last years return. 2. DONT PROCRASTINATE. Resist the temptation to put off your taxes until the last minute. Your haste to meet the filing deadline may cause you to overlook potential sources of tax savings and will likely increase your risk of making an error. 3. TAKE ADVANTAGE OF FREE TAX ASSIS- ' TANCE. The IRS offers recorded messages on about 150 tax topics through its TeleTax service at 4477. It also offers federal tax forms and publications at 1 Many post offices and libraries carry the most widely requested forms . and instructions. Libraries may also have reference sets of IRS publications. The IRS also staffs a tax help line at 7:00 a.m. to 10:00 p.m. on weekdays and 9:00 a.m. to 5:00 p.m. on Saturdays through April 13. 4. VISIT THE IRS ONLINE. Taxpayers accessed the IRS web site at 1 www.irs.gov more than last and a half billion times year. Anyone with Internet access can download tax forms, instructions and publications as well as tax law information and answers to frequently asked tax questions. 5. USE IRS WALK-ISITES AND VOLUN N TEER PROGRAMS. Forms, publications and tax help are available at more than 400 IRS offices nationwide. Check your newspaper or local IRS office to find locations for Volunteer Income Tax Assistance and Tax Counseling for the Elderly sites. 6. FILE YOUR RETURN ELECTRONICALLY. More thn 40 million taxpayers filed their returns electronically in 2001. Aside from ease of filing, is the fastest and IRS most accurate way to file a tax return. If youre due a refund, is the wait time for half that of paper filers. 7. DOUBLE-CHECYOUR MATH AND DATA ENTRIES. Review your return for possible math errors and make sure the names and identification numbers for yourself, your spouse and your dependents are correct and legible. 8. HAVE YOUR le K REFUND DEPOSITED DIRECTLY TO YOUR BANK ACCOUNT. Another way to speed up your refund and reduce the chance of theft is to have the amount deposited directly to your bank account. Check the tax instructions for details on entering the routing and account numbers on your tax return. 9. DONT PANIC IF YOU CANT PAY. If you cant immediately pay the taxes you owe, consider some stress-reducialternatives. You can apply for an IRS installment agreement, setting your own monthly payment amount and due date, and getting a reduced late payment penalty rate. You also have various options for charging your balance on a credit card, either as part of an electronic return or via a phone call to a processing agent Electronic filers with a balance due can file early and authorize the governments financial agent to take the money directly from their checking or savings account on the due date. Note that if you file your tax return on time even if you cant pay, you avoid potential late filing penalties. 10. REQUEST AN EXTENSION OF TIME TO FILE. If the clock runs out, you can get an automatextension of ic time to file, to August 15. An extension of time to file does notgive you an extension of time to pay, however. You can call a Form 4868 that is included in most tax preparation software, or send a paper Form 4868 to the IRS. You will need the Adjusted Gross Income and Total Tax amounts from your 2000 return if you request the extension by computer or four-mon- th le phone. You may also get an extension by charging your expected balance on a credit card and you wont have to file the form. Official Payments Corporation may be reached at or at www.offi-cialpayments.co- m . PhoneCharge, Inc. may be reached at oral www.1888ALLTAXX.com . There is no IRS fee for credit card payments, but the processors charge a convenience fee. Note that the extension itself does not give you more time to pay any taxes due. Generally, you will owe interest on any amount not paid by the April deadline, plus a late payment penalty if you have not paid at least 90 percent of your total tax by that date. small businesses, tax season need not be a source of stress. The right insight can make this necessary chore easier. The first line of defense during this time of the year is a good accountant. The other is using an accounting software package to make keeping the books as painless as possible. CPA John McCabe, who recommends and uses Peachtree Accounting software with his clients, offers small businesses some timely tips and helpful insight for the approaching tax season. Q: Is there a tax break for people who are victims disof natural or man-mad- e asters? A: Yes. Special rules apply if the losses occur in a location declared a federal disaster area by the President of the United States. In such cases, a business owner can treat the casualty loss as if it occurred the year immediately preceding the tax year in which the disaster actually occurred. Q: Do I have to pay tain their books and stay compliant with the latest tax (NAPSA)-Fo- r The Internal Revenue Service announced today that it has already received half of the 132 million returns it expects this year and the agency offered some tips to reduce tax time stress for those who have yet to file. GET GOING. Dont put off your 2001 taxes any longer. The filing deadline is less than three weeks away. Give yourself too little time and youre, more likely to overlook something. Gather the income reports you got from employers and financial organizations. Find the forms sent by mortgage companies, colleges, or financial institutions related to payments you made that may count towards a deduction or tax credit. Review your checkbook and credit card statements for other potential savings. GET ORGANIZED. Once youve gathered yodr records, sort them out- - v changes? taxes on money people owe me? A: Depending on the type of business you have, if a customer or vendor doesn't pay your invoice, you usually can deduct the cost of goods you sell but don't get paid for. However, the IRS expects you to take reasonable steps to collect the debt. Q: When does a room in your home qualify as a home office? A: These rules have relaxed somewhat. A home office now qualifies as a principal place of business if you use it regularly and exclusively to conduct business and there is no other fixed location where you conduct substantial administrative and management activities. Q: Is there accounting software available that can help small businesses main A: Depending upon their accounting needs, small businesses can use any of the products from the Peachtree Accounting line and opt in for the Peachtree Payroll Tax Service. The Tax Service provides information on changes in federal, state and local payroll tax laws. Peachtree also offers a new add-o- n service, Peachtree Web Accounting. Web Accounting works in concert with the Peachtree desktop accounting products to allow a small business' outside accountant or remote employees access to key accounting data through the use of a Web browser. Accountants can assist their clients in maintaining accurate books without ever leaving their offices and help a small business to keep everything making end of the year closing much easier. For more information on Peachtree products and services, visit www.peachtree.com. te tips Put items related to income persons, students, military in one folder, those for potenpersonnel, senior citizens and those for whom English is a tial deductions in a second, second language. Call the IRS and those for credits you in a third. to see if theres a volunteer might claim site in your community. Use your federal and state If you do your own return, tax instructions, along with IRS last from tax returns your employees will answer with this tax questions through a to your help year, e number process. 040 or at walk-i- n offices GET HELP. Once youve around the country. organized your tax records, GET ONLINE. The IRS decide whether youll be has site - www.irs.gov Web or forms the doing yourself " forms and . for else for someone to publications looking handle that job. downloading, information on tax law changes, answers to If you use a paid preparer, choose someone whose frequently asked questions, interactive calculators, expertise is a good match for details and links to private your situation and who will sector be available to help if quespartners. The redesigned Web site tions arise later. has had more than 1.4 billion The IRS sponsors two prohits already this filing season, Income Volunteer grams a 35 percent increase over the Tax Assistance (VITA) and Tax Counseling for the same period last year. There were 150 million Elderly (TCE) - for taxpayers file downloads through who need help but may not afford preparation services. February, a 45 increase over the preceding year. These include toll-fre- - - - low-inco- Where to file your return Once you complete your 2001 federal tax return, you can either file it electronically or mail it to the IRS. If you choose to mail your return, use the enclosed mailing label. If you didnt receive one, be sure to read your tax instruction booklet carefully to find the address of the IRS center or your area. For this year, the IRS has changed some of its filing locations. This is part of a redistribution of work among the 10 IRS centers that will be completed in 2002. Two centers will then be dedicated to processing business tax returns and the other eight will process individual returns. When mailing your return (whether with a payment or without), use the envelope and the appropriate label that came with your tax instruction booklet because the label will have the correct address on it. If you do not have the preaddressed labels and envelope or if you moved during the year, check the tax package to find the mailing address of the appropriate IRS center. For individuals, the center where you file depends on where you live and whether you are enclosing a check or money order or not. Instead of mailing your tax return, you may want to make this the year you file electron pre-print- ically. IRS programs offer quick, easy, and accurate alternatives to filing traditional paper returns. Electronic options include: computer filing through a tax professional, from your personal computer, and TeleFiling using your touch-ton- e phone. le - - This year, more than 45 million taxpayers are expected to participate in IRS programs because they provide a more convenient and faster method of filing returns and getting refunds. For more information on where to file your tax return, visit the IRS Web site at le www.irs.gov . 2002 filing season statistics Cumulative through the week ending 3901 and 3802 |