Six-month tax extension ends Oct. 15
Those who filed for a six-month extension on their income tax returns are running out of time.
Oct. 15 is the last day for most taxpayers, although some still have more time. Members of the military and others serving in Iraq, Afghanistan or other combat zones typically have until at least 180 days after they leave the combat zone to file returns and pay any taxes due.
Of the total 2.7 million Arizonans who file federal tax returns, 238,800 requested extensions, said William Brunson, IRS spokesman in Arizona.
The IRS urges them to double check their returns for often-overlooked tax benefits:
• Benefits for low- to moderate-income workers and families, especially the Earned Income Tax Credit.
• Savers credit, claimed on Form 8880, for low- to moderate-income workers who contributed to a retirement plan, such as an IRA or 401(k).
• American Opportunity Tax Credit, claimed on Form 8863 and other education tax benefits for parents and college students.
The IRS urged taxpayers to choose the speed and convenience of electronically filing their return. IRS e-file is fast, accurate and secure. The tax agency verifies receipt of an e-filed return and people who file electronically make fewer mistakes, too.
Anyone expecting a refund can get it sooner by choosing direct deposit. Taxpayers can choose to have their refunds deposited into as many as three accounts.
For unemployed workers who filed Form 1127-A and qualified to get an extension to pay their 2011 federal income tax, Oct. 15 is also the last day to pay what they owe, including interest at the rate of 3 percent per year, compounded daily. Doing so will avoid the late-payment penalty.
Taxpayers can e-pay what they owe, either online or by phone, through the Electronic Federal Tax Payment System, by electronic funds withdrawal or with a credit or debit card. Those who choose to pay by check or money order should make the payment out to the “United States Treasury.”
Taxpayers with extensions should file their returns by Oct. 15 even if they can't pay the full amount due. Doing so will avoid the late-filing penalty, normally 5 percent per month. However, interest and late-payment penalties will continue to accrue.
In many cases, those struggling to pay taxes qualify for one of several relief programs, including those expanded earlier this year under the IRS “Fresh Start” initiative. Most people can set up a payment agreement with the IRS online in a matter of minutes.
Alternatively, some struggling taxpayers qualify for an offer-in-compromise. This is an agreement between a taxpayer and the IRS that settles the taxpayer's tax liabilities for less than the full amount owed. The IRS looks at the taxpayer's income and assets to make a determination regarding the taxpayer's ability to pay.
Details on all filing and payment options are on IRS.gov.