Good news, people. On April 15, your palms won’t be sweating. Even better, the lines at the post office likely won’t be snaking around the block.
Why? Those nervous people who wait until the last minute to file their taxes have a few more days to prepare.
IRS media relations specialist Karen Connelly explains why taxes are due on April 18 this year. And she will tell you how to curb that panic.
“Even if you feel underprepared or overwhelmed, don’t panic,” says Connelly, whose office serves Colorado, Idaho, Montana and Wyoming. “Getting an early start will make filing easier.”
She answers some of the most common questions the IRS responds to this time of year:
Q: Are there ways to avoid being audited? Or does the IRS simply randomly select people to audit?
A: Most tax returns are accepted just as they’re filed. Each one goes through a computerized screening, and if there are discrepancies, you may receive correspondence from the IRS asking you to verify, correct or explain information on your return. Many issues can be dealt with through correspondence alone.
The best way to avoid an audit is simply to report all of your taxable income and claim only the credits and deductions you are entitled to by the tax law.
Q: What are some of the most significant new tax laws I should be aware of?
A: I’ll start with the first-time homebuyer credit.
You generally cannot claim the credit for a home you bought after April 30, 2010. However, you may be able to claim the credit if you entered into a written binding contract before May 1, 2010, to buy the home before July 1, 2010, and actually bought the home before Oct. 1, 2010. Members of the armed forces and certain other taxpayers may have additional time to buy a home and take the credit.
Next, if you’re filing a 2010 paper return, check the form’s instructions to make sure you have the correct mailing address this year. There may be different addresses for returns with and without a check or money order.
These are just a couple of the changes. Look for more in personal exemption and itemized deductions, Roth IRAs, mileage rates, unemployment compensation and self-employed health insurance deductions.
Q:What would you suggest to the people who discover they didn’t withhold enough during the year and can’t pay their bill in full by the deadline?
A: If you owe the IRS money and can’t pay it all, visit to set up an online installment agreement. The $105 setup fee drops to $52 if you make your payments through automatic debit. Lower-income applicants may qualify for a reduced fee of $43. The fees are adjusted automatically when your online application is processed.
You should file your return on time and pay as much as you can by April 18 because the late-filing penalty is 10 times greater than the late payment penalty. Paying as much as you can when you file your return will help reduce interest and penalty charges. The current interest rate is 3 percent.
Q: Is it true that the filing season deadline was extended to April 18 this year? Why? And how long is the extension to file good for?
A: It’s true. Taxpayers will have until Monday, April 18, to file their 2010 tax returns and pay any tax due because Emancipation Day, a holiday observed in the District of Columbia, falls this year on Friday, April 15. By law, District of Columbia holidays impact tax deadlines in the same way federal holidays do, therefore, all taxpayers will have three extra days to file this year.
Q:I haven’t kept very good track of my finances this year. Can you offer any tips so I’m not in the same boat next year?
A: To ease stress at tax time, here are two simple tips: First, once your tax return is complete, be sure to keep a copy of it. If you had to pay more than you expected or received a large refund, you may want to complete a new Form W-4 withholding statement for your employer. Finally, you can avoid headaches at tax time by keeping track of your receipts and other records throughout the year. If you don’t have a record-keeping system, now is a good time to start one for tax year 2011. It can be as simple as file folders or a shoebox. Just put everything that relates to taxes in one place.
Q: What’s the most prevalent mistake people make when filing their tax return, and how can people avoid it?
A: Some of the most common mistakes we see are spouse’s or dependent’s Social Security numbers incorrect or missing or Social Security numbers and names that don’t match Social Security Administration or our records. We also see incorrect earned-income tax credits and overall tax amounts incorrect. One simple way to avoid mistakes is to let that return rest for a while. Once you’ve completed your tax return, check it, and then put it aside for a day or two, and then check it again. You’ll be surprised how easily you can catch mistakes after a little time.
The IRS is here to help. Try , call toll-free at 800-829-1040, or visit your local Taxpayer Assistance Center (1999 Broadway, 17th floor).
