Sunday, March 15, 2009

How to Get an Automatic Sixth Month Extension to File Your Tax Return

If you are having trouble getting your tax return ready to file b y the April 15th due date, you are entitled to receive an automatic 6 month extension to file your return. BUT, you cannot get an extension to pay your taxes. Your extension application must include a payment of all taxes you will owe; otherwise you will be subject to possible penalties and interest. If you don't file you return by April 15th, and don't get an extension, you will be subject to penalties and interest for failing to file your return on time, plus penalties and interest for failing to pay your taxes on time. Here's how to get your automatic extension: How to Get an Automatic Six Month Extension to File Your Tax Return.

Monday, March 9, 2009

Do you qualify for the new Making Work Pay tax credit?

The American Recovery and Reinvestment Act of 2009 created a new, refundable personal tax credit for 2009 and 2010. This credit is known as the "Making Work Pay" tax credit. For those who qualify, the credit equals 6.2% or earned income, up to $400 for individuals and $800 for married couples who file jointly.

Most working Americans will qualify for the credit, but nonresident aliens and taxpayers who can be claimed as dependents by someone else do not qualify. A taxpayer must include a valid social security number on your tax return. Couples filing jointly need only to have one valid social security number to qualify.

The other issue to qualify for this credit is your Modified Adjusted Gross Income. If your MAGI is less than $75,000 for individuals or $150,000 for couples filing jointly you qualify for the full amount ofthe credit. If you MAGI falls between $75,000 and $95,000 for individuals, $150,000 and $190,000 for joint filers, your credit will be reduced on a sliding scale. If your MAGI exceeds the top level, you won't qualify for the credit at all.

Also, some people will receive the $250 payments provided by the Act. These individuals, recipients of social security railroad retirement benefits, or veteran benefits, will have their credits reduced by that amount.

The IRS has issued new withholding tables to account for this credit, so you don't have to do anything. When your employer begins using these new withholding tables in the beginning of April, you should see an increase in your take home pay which will continue through the rest of the year.

If, however, you are self-employed and pay estimated taxes through the year, you can either wait until the end of the year to take the credit or reduce your estimated payments to reflect the amount of the credit to which you are entitled.

More information is available on the IRS web site,

Tuesday, March 3, 2009

Flexible Spending Arrangements (FSA)

I posted an article on eHow about Flexible Spending Arrangements (FSA)(aka Flexible spending accounts). The article explains the basic requirements for an FSA, the risks and benefits, the amount of money you can put into the FSA, and the tax treatment of contributions and withdrawals. You can find the article at


The IRS issued a press release on March 2nd calling attention to the fact that people who have not yet filed their 2005 tax returns may be owed as much as $1.3 billion in tax refunds. These unfiled returns must be filed by April 15, 2009, or the possible refunds will be lost forever.

If you are one of these individuals, please take action immediately. If you have lost your W-2s or other tax information, there are ways of getting this information directly from the IRS. Don't let this stand in the way of your getting a refund.

For more information, see the following IRS press release.