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IRS reminds taxpayers of looming Oct. 15 deadline and to take all available tax breaks

IRS cautioned the more than 12 million taxpayers who have requested an automatic six-month extension this year that, for most of them, their filing extension runs out on Oct. 15. IRS also advised these taxpayers to double check their returns for often-overlooked tax benefits and to file their returns electronically.

Background on individuals’ 6-month extension. Individuals can request an automatic 6-month extension to file their tax return by filing Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, by the original due date of the return. (Reg. § 1.6081-4) The form must show the full amount properly estimated as tax for the year, but it needn’t be accompanied by payment of the balance of the tax estimated to be due. (Reg. § 1.6081-4(b)) Failure to include the balance due won’t affect the filing extension, but interest on the balance will still be charged, and a penalty for failure to pay may be imposed. Extensions can’t exceed six months unless the taxpayer is abroad. (Code Sec. 6081(a))

IRS urges individuals to meet the deadline. IRS warns the estimated 12 million taxpayers who used Form 4868 to request a six-month extension not to miss their Form 1040 deadline and to file their returns. Taxpayers should file their returns by Oct. 15, even if they can’t pay the full amount due, to avoid the late-filing penalty (normally 5% per month). However, interest (currently 3% per year, compounded daily) and late-payment penalties (normally 0.5% per month) will continue to accrue. If they prefer, taxpayers can e-pay what they owe, either online or by phone, through the Electronic Federal Tax Payment System (EFTPS), by electronic funds withdrawal, or with a credit or debit card.

IRS notes that although Oct. 15 is the last day for most people, some taxpayers still have more time, including members of the military and others serving in Afghanistan or other combat zone localities who typically have until at least 180 days after they leave the combat zone to both file returns and pay any taxes due. In addition, taxpayers with extensions in parts of Colorado affected by severe storms, flooding, landslides and mudslides also have more time, until Dec. 2, 2013, to file and pay.

In addition, IRS advises taxpayers to take a moment before filing their returns to see if they qualify for often-overlooked credits and deductions and to take into account the following:

  • Same-sex couples, legally married in jurisdictions that recognize their marriages, are now treated as married, regardless of where they live. This applies to any return, including 2012 returns, filed on or after Sept. 16, 2013. This means that they generally must file their returns using either the married filing jointly or married filing separately filing status.
  • Savers credit, claimed on Form 8880, for low- and moderate-income workers who contributed to a retirement plan, such as an Individual Retirement Account (IRA) or 401(k).
  • The American Opportunity Tax Credit, claimed on Form 8863, and other education tax benefits for parents and college students.
  • Benefits for low- and moderate-income workers and families, especially the Earned Income Tax Credit.

IRS encourages taxpayers to choose the speed and convenience of electronic filing. IRS notes that e-file is fast, accurate and secure, making it an ideal option for those rushing to meet the Oct. 15 deadline. Everyone can use Free File, either the brand-name software offered by IRS’s commercial partners to individuals and families with incomes of $57,000 or less, or the online fillable forms (i.e., the electronic version of IRS paper forms) available to taxpayers at all income levels.

Taxpayers who buy their own software can also e-file, and most paid tax preparers are now required to file their clients’ returns electronically.

Taxpayers expecting a refund can get it sooner by choosing direct deposit. Taxpayers can choose to have their refunds deposited into as many as three accounts. (Form 8888).