Tax Extension Online Tips

• File electronically. When you file electronically, you're less likely to make errors. If you're due a refund, you'll get it much faster than you will by filing the old-fashioned way.
  
  The IRS Free File program, a partnership between the IRS and private tax-preparation companies, is still available for eligible taxpayers. If you have adjusted gross income of $50,000 or less, you can prepare and e-file your taxes for free, using one of the participants' online programs. Go to www.irs.gov and click on the "e-file" link.
  
  If you don't qualify for Free File, you can still buy tax-preparation programs from major tax preparers, such as TurboTax and H&R Block. You'll probably have to use their online versions because desktop software is hard to find this time of year, says Bob Meighan of TurboTax. "Virtually every retailer pulls tax-preparation software from the shelves on April 16," he says.
  
  You can order software through the mail, but with the deadline less than three weeks away, Meighan says, using the online programs is a safer bet.
  
  
• If you're not a do-it-yourselfer, start looking for a tax professional now. In April, major tax-preparation companies stay open late, offer walk-in service and give away prizes. In the offseason, some branches shut down, and others have limited hours. You may have to call around to find a branch that's open.
  
  To find an enrolled agent in your area, go to www.naea.org, the website for the National Association of Enrolled Agents. Enrolled agents are federally licensed tax preparers who are authorized to represent taxpayers before the IRS.
  
  
• Don't forget to account for payments you made when you filed for an extension. Filing for an extension doesn't give you more time to pay; taxpayers who owe the IRS are supposed to pay a good-faith estimate of their tax bill. But often, Meighan says, those taxpayers then forget to credit that payment when they do their taxes. The IRS will refund the overpayment, but in the meantime, you're out the money. On Form 1040, enter your payment on Line 69.
  
  
• Don't hide under the bed. If you didn't pay the amount you owed when you filed for an extension, you owe more money now, because interest has been accumulating on the balance. You may owe late-payment penalties, too.
  
  Because the interest rate is adjusted every quarter, figuring out how much you owe in interest and penalties is complicated. Meighan's advice: Prepare your return and pay the tax you owe. Once your return is processed, the IRS will send you a notice explaining how much more you owe in interest and penalties.
  
  If you still can't pay your tax bill, file anyway. Otherwise, you'll be subject to a "failure to file" penalty of 5% a month of your tax bill, up to 25%. That's in addition to interest and late-payment penalties. Once you file your return, you're eligible to set up an installment payment plan with the IRS, Meighan says.