Ask a CPA

If you can pay the IRS in less than 120 days from April 15, you should file your return and send in as much money as you can afford to send in with the return. The IRS will send you a bill every 30 days up to 120 days which at that time you will receive the dreaded certified letter saying you are out of time.

The failure-to-pay penalty is generally half of 1 percent per month with an upper limit of 25 percent. You can borrow the money somewhere else. You can pay your taxes with a credit card, however the merchant processing fees of approximately 3% will be your responsibility

If you know you need more than 120 days you can file Form 9465 – an Installment Agreement Request and attach this form to page 1 of your tax return. You can decide how much you want to pay the IRS monthly, but make your payments as large as possible to limit the interest and penalties that will continue to be assessed until you pay the outstanding balance in full.

If you can’t file your return on time, you can file an extension with form 4868. While everyone is entitled to an automatic six month extension to file, people misunderstand that this automatic extension form only gives you more time to file and not more time to pay.

YES- The IRS announced a new six month payment extension form 1127-A which gives you six more months to pay also and avoid the failure to pay penalty. This form is only available for those taxpayers who are unable to pay but were unemployed in the current year for at least 30 consecutive days during the current year or were self employed and suffered greater than a 25% reduction in business income in the current year. To qualify you must also meet certain income limitations. To request an extension of time to pay you must file this form 1127-A separately. Do not attach it to your tax return or do not attach it to form 4868, the other extension form. Payment must be paid in full by Oct 15, 20XX or you will retroactively be assessed penalties and interest.

When you make a settlement with a credit card company, the amount of forgiven or cancelled debt is considered income and is reported to the IRS. A 1099-C, or cancellation of debt tax notice, reports the amount of money you need to include on your tax return. For example, if you settle $50,000 in debt with your credit card company you might still owe the IRS $20,000 in taxes - and the IRS is not as forgiving as the credit card companies. *There is an exception for mortgage debt cancelled on your primary residence as this cancelled debt is not considered income.

Qualified tuition and related expenses paid with student loans are considered in the same manner as cash payments when calculation the American Opportunity and Lifetime Learning credits.

Cost basis is the value of an asset used to calculate capital gain or loss for tax purposes.
For most positions, cost basis is purchase price plus commissions plus disallowed wash sales plus reinvested capital during the time before the sale.

Losses from Wash Sales are disallowed by the IRS and the amount of the loss is added to the cost basis of the repurchased shares on a per share basis.
The holding period is also adjusted to include the days the security was held before the original sale.
When an investor sells shares at a loss and then repurchases substantially identical shares within 61-day window (30 days before and/or after the date of sale, it is called a wash sale.

Category A = Covered = Cost basis is reported to the IRS
Category B = Non-Covered = Cost basis is Not reported to the IRS
Category C = Supplemental = Proceeds Not reported to the IRS
Stock Options fall into Category C which is supplemental information that is supplied to customers when available, but is not reported to the IRS.