Protect yourself with a tax extension

For most people, the deadline for filing your 2001 individual income tax return is April 15, 2002.  If you cannot file your return on time, be sure to file an extension request (Form 4868) with the IRS by this date.  You must pay any tax due by the April 15th deadline to avoid penalties and interest.  But an extension gives you until August 15, 2002, to file your return.

Filing an extension request by the deadline also gives you more time to make important decisions, including:

• Whether to recharacterize the type of IRA contribution (traditional or Roth) you made for 2001.

• Whether to change your mind about a 2001 Roth IRA conversion.

• Whether to establish and contribute to a SEP retirement plan for your business.

• Whether to contribute to certain other retirement plans, such as a Keogh or SIMPLE plan.

• Whether to make certain tax elections, such as the new deemed sale election for capital gains.