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This is a guest post by Manny Davis. Manny is a tax accountant and President of Back Taxes Help, LLC, a tax resolution firm that assists taxpayers in resolving major tax problems and file late taxes. Feel free to subscribe to their tax blog today.

The April 15th tax filing deadline is approaching for Federal and State taxes. If you cannot make this deadline, or you feel you need a tax extension for other reasons, you can obtain a six-month extension automatically. This essentially will give you until October 15th to file your taxes. Before breaking down the steps to follow in order to request a filing extension, lets get a better idea of why you would file a late tax return or file an extension in the first place.

Why Would One File A Tax Extension In the First Place?

Many people may file a tax extension this year because they may want to take advantage of the homebuyer tax credit, reverse an IRA conversion gone bad, or because they simply cannot make the deadline due to unforeseen events.

Unexpected Events

One of the reasons the IRS provides a tax filing extension is because they understand that sometimes deadlines cannot be met due to unintended events. Maybe you experienced a natural disaster, a death in the family, a serious illness, prolonged unemployment, incarceration or any other unexpected event which would have made meeting the April 15th deadline difficult.

You Need To Reverse A Traditional IRA to Roth Conversion

Many taxpayers may have converted a Traditional IRA to a Roth IRA in 2009. If you did convert your traditional IRA, you are expected to pay taxes on that conversion. However, what if since the conversion your Roth IRA has significantly lost value? Why should you pay taxes on money that is not there anymore? The good news is that you would not have to pay taxes on the conversion as long as you reverse or “recharacterize” the conversion before October 15th, 2010 (if you converted it in 2009). Make sure you submit the proper documentation to the financial institution that helped you with this conversion. Working with a tax professional here is in your best interests here if you decide to go through with this recharacterization.

You Want To Take Advantage of the Home-Buyer Tax Credit

In 2008, the home-buyer tax credit was created as part of the Housing and Economy Recovery Act. Then in 2009, the American Recovery and Reinvestment extended the credit as long as a home-buyer purchased before December 1st. It was once again extended to April 30th, 2010. You can qualify for a tax credit if you sign a contract on or before April 30th, 2010 with a closing on or before June 30th, 2010. Therefore, taxpayers who want to take advantage of the tax credit on their 2009 tax return because they are closing after April 15th would have good reason to request a tax extension. Realize that you can claim this tax credit on your 2010 tax return if you are okay with giving the IRS an interest-free loan. Make sure you check the income level restrictions on claiming this tax credit for married and single filers.

Okay, So How Can I Get The Automatic Six-Month Extension to File?

Getting the six-month Federal tax extension or extending your deadline to October 15th is pretty simple. One thing to remember is that this is only a filing extension and not a payment extension. In fact, the IRS will need to have at least 90% of taxes owed. In order to obtain the extension you will need to file Form 4868, “Application for Automatic Extension To File Us Individual Tax Return.” This can be done electronically using tax software, the IRS e-file system, or by sending the form via US mail. If you file electronically, you will receive an acknowledgment or confirmation number for your records. One thing to remember is that you can get a tax extension if you pay your estimated taxes due by credit card — however, there are different fees depending upon who you use. Be sure to save the confirmation received from the service provider.

With regards to State taxes, a simple Google search will help find the correct form to request a filing extension. Most states, if they have an income tax, will allow you to file a six-month extension. Some states, like California, do not require you apply for one. Be sure to check your State’s website.

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OptionsHouse Extends Their 100 Free Trade Offer

February 11, 2010

Online brokerage firm has extended their offer of 100 free trades through April 30, 2010. OptionsHouse offers $2.95 flat-rate stock trades and $9.95 flat-rate options trades. When you sign up from now until April 30, 2010 you will get 100 free trades by using the promotional code FREE100. Options house was voted #1 in […]

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Lending Club $25 Investor Bonus and Reduced Loan Rates

February 9, 2010

About LendingClub LendingClub is a peer-to-peer lending network where investors fund 3yr personal loans for borrowers. LendingClub rely’s on their investors to fully fund all loans requested by borrowers. Allowing the average person to make money on personal loans that were typically reserved for banks. Their lending process is quick and painless and loan applications […]

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