Washington News

Each year, The Tax Foundation publishes the "Tax Freedom Day." For this year, Tax Freedom Day will be on April 17.

Based on averages of incomes and taxes, Americans will work 107 days from January 1 to April 17 to pay the combined 29.2% tax bill for federal, state and local taxes. If the budget deficit amount were paid for through taxes, Tax Freedom Day would be extended to May 14, an additional 27 days.

Tax Freedom Day has typically arrived earlier during the past five years. The latest Tax Freedom Day was May 1, 2000, when the total tax revenue was 33%. Generally, because of the downturn in the economy and reductions in the stimulus bill enacted in 2008, Tax Freedom Day has come earlier during the past four years.

Several states collect lower taxes and have an earlier Tax Freedom Day. These states' Tax Freedom Day include Tennessee on March 31, Louisiana and Mississippi on April 1 and South Carolina on April 3.

The highest tax state is Connecticut, with Tax Freedom Day on May 5. However, New Jersey and New York both celebrate Tax Freedom Day on May 1.

The Tax Foundation also estimates the number of days that you work to pay taxes in these separate categories.

Tax Category	Days
Federal Income	32
State/Local Income	8
Fed. Social Insurance	23
State Social Insurance	1
Fed. Sales	2
State Sales	12
Property Taxes	12
Fed. Corporation	9
Other Fed.	3
State Corporation	1
Other State	4

Editor's Note: The Tax Foundation publishes these calculations each year. They are based on overall tax payment averages. Other publications have observed that the dates would change if the numbers were calculated based upon taxpayer income tiers. However, no other publication calculates Tax Freedom Days for low-income, mid income and high-income taxpayers.

IRS Help for Last-Minute Tax Filing

The IRS published information letters this week to assist taxpayers who are filing their taxes before the April 17, 2012 deadline.

The IRS YouTube channel is the fourth most popular government channel. It receives about 1 million views per year. Taxpayers may find several YouTube programs helpful. They are available in English, Spanish and American Sign Language.

IRS YouTube Programs

• Need more time to file your tax return?
• Last-Minute Tax Tips
• IRS Tax Payment Options
• Owe Taxes but can't pay?
• When will I get my refund?

The IRS YouTube videos are also available on iPhone or Android through the IRS2Go application that may be downloaded through the App Store or Android Marketplace.

For individuals who need extra time to file, it is possible to request an extension with Form 4868 (either electronically or by paper). This extension filing requires that you estimate and pay the correct tax, but your time to file is extended to October 15th.

If you do not pay the correct tax, there is interest of 3% per year and a late penalty of 0.5% per month on the balance.

There are three exceptions to the filing date. If you live and work abroad or are on military duty outside the U.S., you may pay on April 17 and file by June 15. Military members serving in Iraq or Afghanistan may file 180 days after departing the combat zone. Finally, several federal disaster areas in the Midwest are permitted to file and pay on May 31.

Some taxpayers may need more time to pay. If your tax, penalties and interest are $50,000 or less, you may request a payment agreement from the IRS with Form 9465-FS. If you are unemployed or self-employed with a 25% reduction in income for 2011, you may file Form 1127-A to request permission to pay by October 15, 2012. You still must pay the tax plus interest at that time. Finally, if you have a substantial overdue tax obligation, you may be able to negotiate an "offer-in-compromise" with the IRS. This will require the IRS to review all of your income and assets to make a determination as to the correct tax payment.