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Some taxpayers get 6 extra months to pay

Many who were unemployed in 2011 or 2012 or were self-employed business owners who lost 25% of their income can delay their tax payments to Oct. 15 without penalty.

By MSN Money Partner Apr 4, 2012 8:39PM

This post is by Tom Herman of The Wall Street Journal.

 

For most taxpayers, time is drawing short to wrap up the mind-numbingly complex chore of filling out federal income-tax returns and paying whatever is owed to the U.S. Treasury.

 

But this year some people are eligible for additional time to pay without getting hit by a stiff penalty.

 

First, some background: In most cases, the official deadline to file and pay is Tuesday, April 17. (It's usually April 15, but that falls on a Sunday this year, and April 16 is a holiday in Washington, D.C.) Those who can't meet the April 17 deadline can ask the Internal Revenue Service for a six-month filing extension. That would give them until Oct. 15 to file -- but it wouldn't give them more time to pay.

 

Recently, though, the IRS announced plans for "new penalty relief" for some taxpayers who still owe after April 17.

 

The IRS is granting a new six-month grace period on failure-to-pay penalties for "certain wage earners and self-employed individuals." The request for an extension to pay any taxes owed will result in "relief from the failure-to-pay penalty for tax year 2011 only if the tax, interest and any other penalties are fully paid by Oct. 15, 2012." (Post continues below video.)

This special relief is available to two types of taxpayers. One is "wage earners who have been unemployed at least 30 consecutive days during 2011 or in 2012 up to the April 17 deadline for filing a federal tax return this year." The second is for self-employed individuals who experienced "a 25% or greater reduction in business income in 2011 due to the economy."

 

But there are strict income limits. "A taxpayer's income must not exceed $200,000 if he or she files as married filing jointly or not exceed $100,000 if he or she files as single or head of household," the IRS says. "This penalty relief is also restricted to taxpayers whose calendar year 2011 balance due does not exceed $50,000."

 

To seek the 2011 penalty relief, you'll need to fill out a new Form 1127A (.pdf file), available on the IRS website.

 

But don't expect any relief from interest on the amount owed. The IRS says it still is legally required to charge interest on unpaid back taxes and doesn't have the authority to waive this charge. The rate is currently 3% on an annual basis.

 

More from The Wall Street Journal and MSN Money:

VIDEO ON MSN MONEY

2Comments
Apr 10, 2012 11:57AM
avatar
I want to thank the federal government for screwing me and other seniors who had to go back to work.  I make a lousy $12,000 dollars so I am now taxed on 85% of my SS because it is not enough to live on. By my working it is costing me 25%of what I make a year,  I guess the government would like us seniors to just die and not work or collect our SS which we paid into for 40 plus years.  If our elected officials and el presidente would pay into SS and not collect income the way they do(after 2 terms) maybe it would get fixed and we would not have to pay twice.
Apr 15, 2012 6:43PM
avatar

Owe? Short legal tender...? You may not need to file 1127A.  Citibank took it upon themselves to assign a cash value to, and thus, issue to their valued victims a 1099 for frequent flier miles.  

 

Re-gift.

 

Pay to the order of the Internal Revenue Service..Twenty Thousand and no/100 frequent flier miles. [This is equivalent to $500].

 

Memo section: Questions? Please contact Citi.  Thanks.  Watch for black out periods. 

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