Apr 8th 2008, 09:23

IRS Offers Options To Cash-Strapped Taxpayers

Because interest and penalty fees are bound to pile up when you don't file and pay your taxes on time, it's much cheaper and smarter to begin working through your income tax returns at the earliest date possible. For some taxpayers, however, the problem isn't about beating the deadline; instead, it's about not having enough money to pay their taxes in full.

To counter this common dilemma, the U.S. Internal Revenue Service offers various options to taxpayers that enable them to meet both the April 15 filing deadline and their tax obligations. For instance, you can file your return well before the deadline, pay only as much as your budget allows you to, and go to http://www.irs.gov/individuals/article/0,,id=149373,00.html
to find out how you can request for a payment agreement. All you need to do is to provide general information about your tax situation to avail of a short-term payment extension or a monthly payment plan.

With a short-term payment extension, you can pay your taxes up to 120 days later than the deadline. On the other hand, a monthly payment plan or installment agreement provides you with much more time to fulfill your taxes. Although the usual interest rate still applies, the penalty fee for late payments is reduced by 50 percent for any month that the installment agreement covers. However, it must be noted that the lowered rate of 0.25 percent for each month will only be in effect if you file your tax return before the deadline.

You might also want to apply for a payment agreement by completing Form 9465, also known as the Installment Agreement Request. Other taxpayers are can also work around the deadline for their filing and paying their taxes, depending on their circumstances. For members of the military who serve in combat-zone areas such as Iraq or Afghanistan, for example, the deadline is put on hold until 180 days after the member steps out of the combat zone.

Those affected by recent calamities are given some leeway with the deadline, with postponements stretching on to May 6 for some parts of Illinois, May 19 for some areas in Georgia and Missouri, and May 27 for specific parts of Arkansas.

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