The close of every tax season sees those frantic filers scrambling to make the deadline. Good news: this year taxpayers get two extra days and returns are due April 17. Despite that, the use of electronic filing of tax returns and extensions has made it easier for taxpayers to wait until the last minute. The following are tax filing tips for those procrastinators:
The IRS has made the promotion of E-filing a priority for individual taxpayers. According to the IRS, more than 80 million returns, including 54.3 percent of individual income tax returns, were filed electronically in 2006. In fact, during the next several years, e-filing will become mandatory, so the sooner taxpayers become familiar with the process the better. There are several e-filing options available:
» Have a tax professional file on your behalf
» Purchase tax software with e-filing capabilities
» Free-File. Through a public-private partnership between the IRS and the tax software industry, taxpayers may access free, online tax preparation and electronic filing services through www.irs.gov. Eligible taxpayers (who have an adjusted gross income of $52,000 or less in 2006) may prepare and file their federal income tax returns using online software provided by the Free File Alliance companies.
» Use TeleFile. Request the Telefile package from the IRS. Follow the instructions in a TeleFile booklet, fill out the worksheet, then call TeleFile.
If taxpayers need more time to finish their returns, they can file for a four-month extension by using IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.
In addition to filing for an extension by mailing paper form 4868 to the IRS, taxpayers can also e-file an extension request by using tax preparation software or with an authorized e-file tax preparer. Computer filers must provide information from their 2005 return.
Also, it is a common myth that taxpayers are more likely to trigger an audit should they choose to file an extension. While the IRS does not release their audit selection criteria, most tax practitioners would agree that there is no correlation between audit selection and extension of a tax return.
Jack Nuckolls is a senior tax director in the Bay Area practice of BDO Seidman, LLP. He can be reached at email@example.com.