April 15th is the deadline for most people to file their individual income tax return and pay any tax owed. If you have not paid the tax in full and if there is any money owed, you will be sent a bill. Generally, interest is charged on any unpaid tax from the due date of the return until the date of payment. The interest rate is determined every three months and is the federal short–term rate (currently 7%) plus 3 percent. Interest is compounded daily.

If you file on time but don’t pay all amounts due on time, you’ll generally have to pay a late payment penalty of one–half of one percent of the tax owed for each month, or part of a month, that the tax remains unpaid from the due date, until the tax is paid in full or the 25% maximum penalty is applied. Further, the one–half of one percent rate increases to one percent if the tax remains unpaid 10 days after the IRS issues a notice of intent to levy. For individuals, who file by the return due date, the one-half of one percent rate decreases to one-quarter percent for any month in which an installment agreement is in effect.

If you owe tax and don’t file on time, the total late–filing penalty is usually four and one-half percent of the tax owed for each month, or part of a month, that your return is late up to five months. If your return is over 60 days late, the minimum penalty for late filing is the smaller of $100 or 100 percent of the tax owed. You must file your return and pay your tax by the due date to avoid interest and penalty charges. For individuals, the due date is April 15^th of each year unless that date falls on a weekend. In that case, the due date is the first Monday after the 15^th.

By Charley Dargan   

Even so, taxpayers can’t put the task off much longer, so if you’re still scrambling to file, here are a few basic tips:

• Forms can be downloaded at www.irs.gov and are also available at many post offices and libraries.
• You can also file your return electronically. By filing on-line and signing up to receive your refund via direct deposit, you may be able to receive your refund in as little as two weeks, according to the IRS.
• If your adjusted gross income is $5,000 or less, you may file electronically for free by logging onto www.irs.gov and clicking on the “Free File” link.
• Avoid common errors such as failing to include the correct social security number for you or your spouse, making a math error, failing to report income from interest, dividends and capital gains.
• If you owe taxes and can’t pay, you can apply for an IRS installment agreement.
• If you can’t get your taxes done by the 17^th, you may file for an automatic, six-month extension by filing form 4868. However, you still need to estimate your tax liability and, if you owe, must make a payment.
• If you are choosing a tax preparer, the IRS suggests you be wary of any preparer who says they can grantee you receive a larger refund than its competitors. Also avoid preparers whose fee is based on a percentage of your return. Do not sign a blank tax return and give it your preparer.

While filing taxes may be time consuming, the good news is so far, the amount of the average refund is $2,314, up $104 from last year.

Good luck, and enjoy the extra two days.

By David Plowman