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Tax-filing deadline looms; IRS has options for extensions

U.S. Individual Income Tax Return Form 1040

April 16, 2012 12:00:00 AM PDT
Taxpayers get two extra days to file their income taxes this year, but the IRS expects many of them will still need more time to file their tax returns. If you're one of them, here's what you need to know to get extra time and avoid paying any penalties.

There's just one more day to file your taxes. No matter what, make sure you do. If you don't file a tax return, you're facing a penalty for failure to file that is quite expensive. That penalty is 5 percent of your outstanding tax bill per month until you do file, up to a maximum of 25 percent. You can file a six-month extension by submitting Form 4868, available by download from the IRS website. Make sure it's postmarked by April 17.

You can also "e-file" an extension by using tax preparation software with your own computer, or by going to a tax preparer who has the software.

And even if you file an extension, remember you still have to pay your tax bill, otherwise you could be charged a penalty for failure to pay, and that's an additional 1 percent of your tax bill per month, plus you will be charged interest on the unpaid bill.

If you don't have the money to pay for any or all of your tax bill, the IRS does have some payment options available.

You may even qualify for something new called the Fresh Start Initiative. The initiative can help you set up an installment plan. Or you may qualify for a six-month grace period if you're unemployed, going through a bankruptcy or you owe over a certain amount.

Finally, if you're due a refund, there is no penalty for failure to file. However, you can't get a refund without filing a tax return. And if you wait too long to file, you may risk losing the refund altogether because there is only a three-year window of opportunity for claiming a refund.