It’s no secret that our country’s economy is doing poorly, and it is making life especially difficult for some people to get their taxes paid. Fortunately, FloridaToday.com has put together a list of questions and answers with tax tips for people struggling to get through the recession. Check out their advice below!
Q: What if I can't pay my taxes?
A: Don't panic. If you cannot pay the full amount of taxes you owe by April 15, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. You also should contact the IRS to discuss your payment options at 1-800-829-1040. You may be granted a short-term extension to pay or an installment agreement. In some cases, the IRS may waive penalties, but will not excuse interest charges on unpaid tax bills.
Q: What if I lose my job?
A: You must pay taxes on severance pay, unemployment compensation and any amount paid for accumulated sick time or vacation. The IRS recommends having estimated taxes withheld so you're not stuck with a big tax bill. The federal stimulus package exempts the first $2,400 of unemployment benefits received in 2009.
Q: What if I lose my home through foreclosure?
A: Under the Mortgage Forgiveness Debt Relief Act of 2007, taxpayers generally can exclude income from the discharge of debt on their principal residence or mortgage restructuring. This exception does not apply to second homes or vacation homes. In some cases, you may be able to file an amended tax return for previous tax years.
Q: What if I can't file by April 15?
A: In the end, if you can't get organized, don't rush it. You can get an extension until Oct. 15 by filing Form 4868, "Application for Automatic Extension of Time To File U.S. Income Tax Return" by April 15.