- The Washington Times - Monday, March 16, 2009

The economy has many taxpayers wondering about special circumstances involving the loss of a job, home foreclosure and other pressing money matters. Here are answers to some common questions provided by the IRS.


Q: What if I can’t pay my taxes?

A: Don’t panic. If you cannot pay the full amount of taxes you owe by April 15, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. You also should contact the IRS to discuss your payment options at 1-800-829-1040. You may be granted a short-term extension to pay or an installment agreement. In some cases, the IRS may waive penalties, but will not excuse interest charges on unpaid tax bills.

Q: What if I can’t resolve my tax problem with the IRS?

A: Contact the Taxpayer Advocate Service, an independent organization within the IRS whose employees assist taxpayers experiencing economic difficulties and who could not resolve problems through normal channels. You can contact TAS by calling 1-877-777-4778 to determine whether you are eligible for assistance. For more information, go to https://www.irs.gov/advocate.



Q: What if I lose my job?

A: You must pay taxes on severance pay, unemployment compensation, and any amount paid for accumulated sick time or vacation. The IRS recommends having estimated taxes withheld so you’re not stuck with a big tax bill. The federal stimulus package exempts the first $2,400 of unemployment benefits received in 2009. See: https://www.irs.gov/pub/irs-pdf/p4128.pdf.

Q: What if I’m searching for a job?

A: You may be able to deduct certain job search expenses, even if you do not get a new job. Expenses may include travel, resume and outplacement agency fees. Moving costs for a new job at least 50 miles away from your home may also be deductible.



Q: What if I lose my home through foreclosure?

A: Under the Mortgage Forgiveness Debt Relief Act of 2007, taxpayers generally can exclude income from the discharge of debt on their principal residence or mortgage restructuring. This exception does not apply to second homes or vacation homes. In some cases, you may be able to file an amended tax return for previous tax years. For more information, see https://www.irs.gov/individuals/article/0,,id179414,00.html.

Q: What if I sold my home for a loss?

A: Losses from the sale of personal use property, such as your home or car, are not deductible. It is not eligible for the capital gains loss of up to $3,000 annually. For more information, see https://www.irs.gov/pub/irs-pdf/p523.pdf.



Q: What if I can’t file by April 15?

A: In the end, if you can’t get organized, don’t rush it. You can get an extension until Oct. 15 by filing Form 4868, “Application for Automatic Extension of Time To File U.S. Income Tax Return” by April 15.

Special rules may apply if you are living outside the United States, out of the country when your 6-month extension expires or serving in a combat zone or a qualified hazardous duty area.

Additional information is available at:


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