Bankrate's 2009 Tax Guide
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7 tax terrors and how to overcome them

This means installing a firewall and virus protection, either as software or a hardware barrier, and then updating it regularly.

Of course, says Morse, taxpayers still must trust the IRS to safely store our data, but at least e-filers can know they did their part in the security process.

As for data losses, almost every computer user knows the frustration of dealing with a crashed machine. Tim Margeson, general manager of CBL Data Recovery Technologies Inc., headquartered in Armonk, N.Y., points to an oft-repeated warning as the surest way to avoid this: Save and back up your files regularly. This is especially important for home PCs, even beyond tax season, because of what Margeson calls "the unique issues -- children and pets and food" -- that the machines face.

You don't need any fancy software to back up your data, says Margeson. "You can just copy the files the same way you copy other material, send it from 'my docs' to a CD or USB drive."

"There's no reason that a computer or data loss should cause filing problems," says Margeson. "The IRS doesn't really accept that as an excuse for a late or no return."

7. Afraid to file because I can't pay

The only thing scarier than filing taxes is what could happen if you don't file. The IRS penalty for not filing is actually worse than if you file but don't pay your tax bill in full.

If you owe tax and don't file on time, the late-filing penalty is usually 4.5 percent of the tax owed for each month, or part of a month, that your return is late. However, if you file on time but just can't pay your tax bill then, you'll generally face a late-payment penalty of only one-half of 1 percent of the tax owed for each month, or part of a month, that the tax remains unpaid.

The total nonfiling and nonpayment penalties could reach a cumulative 25 percent maximum penalty. But if you file your forms on time and then make arrangements to pay, you can avoid taking that hardest tax penalty hit.

The remedy: File! And file on time. If you can't afford to pay your full tax bill, send Uncle Sam at least a down payment. Even sending in an extension request with a nominal payment is better than not filing at all. Then worry about coming up with the cash.

"Never don't file," say Rosenberg. "There's no reason to put yourself in that position. File the return and establish a plan to deal with the consequences of not having the money."

You have several payment options. Use a credit card to meet your tax debt then pay it off as quickly as possible. Go with the card that has the lowest interest rate or a zero-percent rate one if possible. The IRS also has payment plans. Though these add interest charges to your tax bill, at least you can be assured that you're meeting your filing and payment obligations.

And this year, as millions of folks are facing financial difficulties because of the dismal economy, the IRS says it will be more flexible in cases where taxpayers are having trouble paying their tax bills.

As noted in "Recession changes IRS' tactics," IRS Commissioner Douglas Shulman has instituted several programs to deal with financially strapped taxpayers. "If you can meet your obligations, we will expect you to do so," says Shulman. "But if you can't for legitimate reasons, we want to be especially sensitive in these tough economic times."

Face your tax fears early
By now, you should be a little less anxious about that impending return. By taking a few simple steps, you should be able to completely overcome most of your filing fears.

Look at what causes your heart to race and your palms to sweat, then map a strategy using our suggested remedies to overcome those fears. And be sure to keep that tax filing plan in place year round.

"Trying to pull things together at the end of year when you're not organized during the year is not a good idea," says Simon. "You need to plan throughout the year, not in April."

When you do that, then tax filing fear won't be a factor.


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