Enron Mail

From:sandra.brawner@enron.com
To:kennethbrawner@msn.com
Subject:Income Tax - Information
Cc:
Bcc:
Date:Mon, 9 Apr 2001 07:51:00 -0700 (PDT)

April 8, 2001, 10:45PM

Learn the ins and outs of filing after mid-April
deadline

By GARY KLOTT
Tribune Media

For the many millions of individuals who have yet
to file their 2000 income tax returns, there is no
reason to panic.

If you need more time to file your return, you can
easily get a filing extension.

And if you can't afford to pay your tax bill now,
you can buy more time to pay up. While you may be
subject to interest and penalties for payments
made after April 16, you can put off the day of
reckoning for months without fear that IRS
collection agents will come after you. There is even a
loophole in the law that will enable many
individuals to get an extra month to pay up without being
assessed interest or penalties.

Nevertheless, April 16 is a critical deadline for
anyone who has yet to file his tax returns. You'll need
to file either your tax return or an extension
request by the deadline. And to avoid interest and
penalties, you'll generally need to pay any taxes
owed by April 16.

April 16 is also the deadline for making IRA
contributions for 2000 returns and for making the first
installment of quarterly estimated taxes for 2001.

Filing extension: If you'd like more time to file
your return, getting a filing extension is simple. In fact,
the IRS has expanded the options this year for
obtaining a filing extension. You can now do it by
phone, computer or mail.

The traditional way to get an extension is to fill
out IRS Form 4868, "Application for Automatic
Extension of Time to File U.S. Individual Income
Tax Return" and mail it to the IRS by the April 16
deadline. If you're using tax-preparation software
or a tax professional, you can file your extension
request by computer. Or you can phone in your
extension request by calling 888-796-1074.

If you owe the IRS money, another option for
requesting an extension is to make the payment by
credit card (American Express, Discover or
MasterCard) on the Internet or by phone through one
of the two companies the IRS has authorized for
processing credit card payments. Details on the
option are included in the Form 4868 instructions.

By making the extension request, the IRS will
automatically give you four more months, until Aug.
15, to file your return.

You can get an extension for any reason. No
explanation is asked for when requesting an extension.

But be aware that your extension request only
gives you extra time to file your return, not to pay
your taxes. To avoid interest and possible penalty
charges, you must estimate how much you owe
and make the payment with your extension request
by the April 16 deadline.

Unable to pay: If you can't afford to pay your tax
bill, you should at least file an extension request by
the April 16 deadline.

Though you'll be subject to interest and possible
penalty charges for late payment of your taxes,
you'll avoid being hit with a late-filing penalty,
which runs a steep five percent a month (up to a
maximum 25 percent.)

Installment plan: If you still don't have the cash
to pay your taxes by the time your extension runs out
on Aug. 15, you can negotiate with the IRS to pay
your balance due in monthly installments. You
make the request for an installment agreement when
you file your completed tax return using Form
9465, "Installment Agreement Request."

"Offer in compromise": If you can't afford to pay
all you owe in taxes, even in installments over a
period of years, you may be able to work out a
settlement with the IRS. The IRS recently expanded
its "Offer in Compromise" program, in which
taxpayers in tough financial situations can offer to settle
for less than they owe. Offers are submitted using
IRS Form 656, "Offer in Compromise."

A loophole offers an extra month to pay up: If all
you need is an extra month or so to come up with
the cash to pay your tax bill, there is a way you
may be able to get a short reprieve without being
subject to interest or penalties.

All you need do is take the IRS up on its offer to
calculate your tax bill for you.

If you're eligible for the offer, fill out your
tax return, stopping short of computing certain totals, and
send it in by April 16. The IRS will compute your
tax and send you a bill for any tax owed. If you
pay within 30 days of the notice, you won't be
assessed any penalties or interest.

To take advantage of the loophole, your taxable
income must be less than $100,000 and you can't
itemize deductions. The full list of eligibility
requirements and step-by-step instructions are contained
in IRS Publication 967, "The IRS Will Figure Your
Tax."

Retirement account contributions: If you hope to
contribute to an Individual Retirement Account, the
final deadline for 2000 tax-year contributions is
April 16, even if you obtain a filing extension.

The deadline is more flexible for self-employed
retirement plans. Contributions to Keogh or
Simplified Employee Pension (SEP) plans can be
made up until the due date of your return, which
can be later than April 16 with a filing
extension.

Estimated tax deadline: For self-employed workers
and other individuals who need to make
quarterly estimated tax payments to the IRS, April
16 also is the deadline for making the first
installment for 2001.