The IRS will grant an automatic extension to anyone who asks. But you still have to estimate what you owe and send the money.
This post is by Laura Saunders of The Wall Street Journal.
For taxpayers who can't manage the April 15 deadline, the Internal Revenue Service offers an automatic six-month filing extension. This year the due date is Oct. 15, and taxpayers qualify by filing Form 4868.
Getting an extension is preferable to filing a return with mistakes, says Melissa Labant, a tax specialist with the American Institute of CPAs. "If you have already filed, then you will need to amend the return, which is often more trouble," she says.
Remember that an extension to file isn't an extension to pay. Uncle Sam wants 100% of the total tax by the April due date, or interest and perhaps a late-payment penalty will be due.
Because the IRS charges taxpayers a hefty fee to use plastic, it's usually not a good deal. If you don't have the cash, other options could cost you less.
This post is by Jason Steele of Credit.com.
And while some are vaguely aware that there are ways to pay taxes with their credit cards, few really understand the benefits and drawbacks of these options.
Here are the basics.
A plain vanilla return is usually safer than one that stands out. But if you have deductions that are above average, it's OK to take them.
This post is by Kay Bell at Bankrate.com.
Some of the information that you provided to us does not agree with the information we received from other sources.
— The Internal Revenue Service
You've just joined an elite club, one whose initiation ritual is an IRS audit.
Unfortunately, you can't refuse membership — and the dues could be astronomical.
In your rush to get your return filed on time, watch for these pitfalls. Some can be difficult and expensive to fix.
This post is by Laura Saunders at The Wall Street Journal.
Despite the year-end cliffhanger on Capitol Hill, lawmakers made few surprising changes to the tax code for 2012.
But that doesn't mean taxpayers won't stumble into trouble, given the rise of electronic filing, expanded reporting requirements, computerized document matching — and old-fashioned human nature.
Common problems fall into two general categories. One involves flubs for which taxpayers must fork over interest and penalties — or get a smaller refund. The second category of pitfall includes major quagmires that require enormous of amounts of time, money and trouble to resolve.
Make sure you're getting all the deductions you should for your mortgage, charity efforts and work life. But don't raise any red flags.
This post is by Matt Twomey at CNBC.com.
And then there are some deductions that could raise red flags for the IRS and get your return kicked back to you — or worse, trigger an audit.
Two simple rules that can save a lot of hassle are 1) Don't be sloppy; take your time to avoid careless mistakes; and 2) Think like the IRS, which likes matching numbers. If your mortgage deduction claim is different than what the bank reported, for example, red flags will rise.
Identity theft used to steal refunds again tops the list of the most common wrongdoings perpetrated against taxpayers.
This post is by Kelly Phillips Erb at Forbes.com.
Each year, the Internal Revenue Service issues a list of "Dirty Dozen" tax scams that can affect taxpayers. The list runs the gamut from schemes involving taxpayer participation (hiding offshore income) to schemes that taxpayers may know nothing about (identity theft). The IRS posts the list to educate taxpayers about the need to protect financial information and use common sense.
Acting IRS Commissioner Steven Miller reminds taxpayers, about the potential for fraud: "The Dirty Dozen list shows that scams come in many forms during filing season. Don’t let a scam artist steal from you or talk you into doing something you will regret later."
Here are the Dirty Dozen scams for 2013:
Gains from stocks and mutual funds are taxed at a lower rate than regular income. But those aren't the only investments from which you can get the lower capital gains rate.
This post is by Bill Bischoff of MarketWatch.com.
If you're a stock or mutual-fund investor, then you probably know that investments held for more than a year and sold for a profit are subject to lower tax rates as long-term capital gains. Generally speaking, if you're in the 25% tax bracket or higher, you will owe 15% of your profits to the Internal Revenue Service. If you're in the upper-income category, you may owe the maximum 20% rate for 2013 and beyond.
But what you might not realize is that more than just stock and mutual-fund shares are eligible for favorable capital-gains tax treatment.
If you sold, say, your vacation time share or your country-club membership, then you just might be pleasantly surprised to discover you'll owe only 15%, or at most 20%, on the gain (assuming that you held the asset for more than a year).
Tax pros estimate twice as many Americans will need to file gift-tax returns this year, after rushing to give away assets during the 'fiscal cliff' frenzy.
This post is by Deborah L. Jacobs of Forbes.com.
In the countdown to April 15, many people rushing to prepare their individual income tax returns will overlook another key tax document that’s due the same day: Form 709, covering taxable (or potentially taxable) gifts made during the previous year. Tax pros estimate there are more than twice as many people in this category for the current filing season (covering 2012) than for the previous one.
This is one more thing to blame on the year-end fiscal cliff frenzy. Unless you were living under a rock or have already mentally repressed the details, you probably recall that the $5.12 million per-person exclusion from the federal estate and gift tax had been scheduled to dip automatically to $1 million on Jan. 1, with the tax on transfers above that amount rising from 35% to as much as 55%.
At the urging of their financial advisers, some wealthy people rushed to make lifetime gifts that would pare down their estates, ruining the holiday season for their lawyers and tax advisers.
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