Even though most people consider tax season
to be a major pain, there are some basic ways to ease your tax frustrations -- lowering the amount you fork over to Uncle Sam, and warding off potential tax problems in the process.
Here are 3 quick tax tips to help you accomplish all these things for the 2011 tax season:
1. Don't delay -- even if you can't pay:
So many people fail to file taxes (or even request an extension) simply because they can't afford to pay their tax bill. That's a big mistake.
When you owe the IRS, the penalty for failing to pay is 0.5% of your unpaid taxes per month, up to a maximum of 25%.
However, the penalty for failing to file is 10 times worse: it's 5% of your unpaid taxes per month, up to a cap of 25%.
So it's far less costly to go ahead and file, even if you don't have the cash on hand to satisfy your tax bill in full.
Besides, those who owe the IRS have options: like payment plans or an offer-in-compromise
. So at the very least, you should file on time or file IRS form 4848 to get an automatic six-month extension if you can't file your taxes by the April 18, 2011 deadline. Even with an extension, however, you still have to pay what you owe by the April 18 deadline. Otherwise, you'll get hit with interest and possible penalties. An extension gets you more time to file, not more time to pay.