It's important that you file on time each year. Even if you need more time, you can easily file for a six month extension. If you can't pay what you owe, there are options...but fewer if you haven't filed on time for the previous five years.
1) File on timeThis year the filing deadline is midnight on April 18th, 2011. It's pretty easy these days to complete basic taxes quickly with online tools, but if you need more time...you can still file an extension.
2) Need more time?File for a six-month extension...for FREE...by midnight on April 18th. Jonathan over at MyMoneyBlog wrote a post on two ways to freely file for an extension online. I was going to follow his recommendation to use TaxAct to file for an extension this year, but I ended up filing anyway. An extension gives you up to six more months to file your taxes. Online tools can help you estimate your taxes, and if you think you owe, it's best to pay when you file your extension, or you may accrue penalties and fees. There are many reasons why you might want to file for an extension, just know the IRS doesn't really care why. It's easy. And it's free. So if you are freaking out about time, do it and relax a little.
3) Not sure how to do your taxes? Forms look daunting?Use online tax filing services. Though everyone can technically find some way to prepare and e-file for free, the most helpful services limit who can use their free versions. I've happily used TurboTax and TaxAct and they make taxes easy with their Q&A style. I just wish I had seen the IRS "free version" links before paying for TaxAct this year, but even so, it was only $17.95 for Federal & State. If you have a few hundred bucks and complicated taxes, it might be a great idea to hire a professional for peace of mind. They'll be less busy after the filing deadline (don't forget to file for an extension!)
4) Owe taxes, and can't pay?Assuming you can't borrow or use your credit (which would probably be cheaper), if you qualify, an installment agreement is the easiest way to pay off your tax debt. There's also a partial payment installment agreement, where some of the debt is forgiven. If these don't apply, there are still other options. I'm no expert, I'm just trying to point out that you will be able to face and deal with whatever your situation is and you probably aren't going to jail. You have options. Now breathe.
5) Fear *still* have you stuck?You can have more time, use software to walk you through the entire process, and even if you can't pay what you owe right now, you have options. Still stuck? Find a "Tax Buddy". Whether it's someone who will cheer each step of your progress or sit down with you and keep you company while you face down your tax fear...find a way to get help from someone you like and trust. Or maybe you are afraid of what you don't know? Afraid of what you *may* owe? Afraid of the consequences of past mistakes? I'll be that it's easier to *know* what your situation is, and face it...than to stay afraid of what may be.
I emptied my retirement savings to pay living expenses this past year and didn't withold enough to cover the penalty. I was terrified to do my taxes this year and kept putting it off. I owe the IRS over $4000 and I can't pay that right now. But I took the time to research my options and now I no longer have fear of the unknown. I know what I owe, I submitted paperwork for an installment plan, and I'm waiting for the IRS to send me a bill. And I released a lot of energy that was all tied up in worry and avoidance. Whew.
What do you fear the most during tax time? How do you handle it?