4. October 2012 21:44 / Author: Ashleigh Rhodes / Tax Credits , Tax Industry News , Tax Tips / Comments
The IRS has indicated that many of the more than 11 million individual taxpayers who requested an extension to file their 2011 tax return have yet to file. If you requested a Federal tax-filing extension, you will need to submit your return to the IRS by Monday, October 15th. Some taxpayers have more time,including taxpayers with extensions in parts of Louisiana and Mississippi affected by Hurricane Isaac, who have until January 11, 2013, to file and pay. Double check your tax returns for any over-looked tax benefits, and then e-file your return using TaxSalyer.com.
Before filing, take a moment and see if you can qualify for often-overlooked tax credits and deductions for low and moderate income workers and families, that can help you get a larger tax refund. These tax credits and deductions include:
o If you are eligible for the Earned Income Tax Credit, the TaxSlayer.com software will calculate the tax credit for you.
· Savers Credit (Retirement Savings Contributions Credit)- which is claimed by low-and moderate-income workers who contributed to a retirement plan
· Other education tax benefits for parents and college students.
Taxpayers who filed an extension for their 2011 tax returns should file their returns by October 15 2012 to avoid the following penalties:
1. Failure To File Your Tax Return / Late Filing Penalty
· 5% of unpaid balance for each month or part of a month the return is late. Maximum 25%.
· If the return is more than 60 days late, the minimum penalty is the lesser of $135 or tax due. There is no penalty if the return shows a refund.
· If the taxpayer is subject to failure to file and failure to pay penalties for the same month, the failure to file penalty is reduced by the failure to pay penalty. (Section 6651(a)(1) )
2. Fraudulent Failure To File Your Tax Return
· The late filing penalty, which is listed above, is replaced with 15% of tax per month, not to exceed 75% of tax. ( Section 6651(f) )
3. Failure To Pay Taxes Owed / Late Payment Penalty
· 0.5% of unpaid balance for each month or part of a month there is an unpaid balance. Maximum 25%.
· The penalty is half the usual rate for any months an installment agreement is in effect. (Section 6651(a)(2) )
4. Underpayment of estimated tax by individuals
· Interest at federal rate for underpayments applied to the underpaid amount for the number of days late. The federal rate changes by quarter from 4-6% on average. (Section 6654)
5. Willful failure to pay tax or file return
· Misdemeanor—up to $25,000 fine, one year in prison or both; $100,000 for corporations. (Section 7203)