April 14, 2010 -- It's that time again: the deadline to file income tax returns is less than 48 hours away and the Internal Revenue Service is predicting that some 10 million Americans won't file their returns on time.
But that doesn't mean they're deadbeats -- these taxpayers, the IRS said, will be filing requests for extensions on their returns, and so can you through the IRS's Web site.
An extension allows taxpayers another six months -- until Oct. 15 -- to prepare their returns, but late filer beware: If you expect you'll owe the government money, the IRS still will want its check in the mail by tomorrow. A tax return extension typically allows you more time to do your paperwork, not more time to pay.
Victims of the recent East Coast storms, however, will get special accommodations this year: Americans living in areas recently declared federal disaster areas -- specific counties in New Jersey, Massachusetts, Rhode Island and West Virginia -- are automatically entitled to an extension that allows them to file their returns and make their payments until May 11. (For a breakdown of qualifying counties, click here.)
Those filing for extensions outside federal disaster areas, meanwhile, face the formidable task of estimating their tax payments while the clock is ticking. So how do you do it?
Tom Ochsenschlager, the vice president of taxation for the American Institute of Certified Public Accountants, and Melissa Labant, the association's tax technical manager, said if you're really pressed for time, here's one quick strategy to follow:
1. Subtract the standard deduction -- $11,400 for married couples filing jointly and $5,700 for singles -- from your gross income.
2. Multiply that number by the highest marginal tax rate (35 percent).
3. Subtract from it the amount of income taxes already withheld through your employer (a total available on the W2 form provided by your employer.)
Tax Returns: Why You Shouldn't Rush
Your result will be a very conservative estimate of what you owe. It's likely, in fact, that using this strategy will result in you overpaying your tax bill, but Ochsenschlager and Labant say it's better to overpay than to underpay and be hit with IRS penalties. The IRS will return your overpayment after you file your regular return.
If you have paid the Alternative Minimum Tax in previous years, you may want to assume you'll be hit with it again. In this case, your tax estimate strategy will be slightly different: Multiply your gross income by the highest AMT marginal tax rate (28 percent) and then subtract from it the income taxes withheld through your employer.
Though you still have more than a day to complete and file your return, Labant said you may want to file an extension anyway to avoid making costly errors while rushing through your return.
"It's easier and simpler just to file an extension and try to complete your tax return as soon as possible," Labant said.
She added that filing for an extension won't make you any more likely to be chosen for an audit.
"Contrary to popular belief, extending your tax return does not raise any additional red flags with the IRS," she said.
Still not keen on filing for an extension but worried about filling out your returns? An alternative, Ochsenschlager said, is to try tax filing software or turn to an accountant.
Of course, getting an accountant to return your phone calls on tax deadline day is likely to be rather tricky. Financial planner Nick Laverghetta said you might want to track down a financial planner first and check if he or she can connect you with an accountant willing to make quick work of your returns.
Laverghetta, the principal of NCM Capital Management, Mahwah, N.J., said planners often have special relationships with accountants who will do them such favors. The planner might be willing to help you, he said, in exchange for your business down the road.
"I would return a potential client's call, whether or not I could or couldn't (help)," he said.