A Tax Tip that Could Save Your Life. Really!

A study reported recently in the Journal of the American Medical Association discovered that fatal automobile accidents increase on tax-deadline day -- usually April 15, but this year April 17. A review of 30 years' worth of data from the National Highway Traffic Safety Administration showed that the death rate on our roads runs 6% higher on tax day than on other April days.

Maybe drivers are rushing to the post office to get a last-second postmark on the envelope carrying their 2011 Form 1040. Or maybe they're simply stressed out by having to settle up with Uncle Sam. Perhaps they're on unfamiliar roads in the dark of night.

But here's the lifesaving tip: Most Americans don't have to file their returns by midnight of deadline day.

The penalty for being late is based on how much money you owe with the return. If you're among the vast majority of taxpayers who get a refund, you owe nothing so there is no penalty. (Last year, the IRS received about 145 million individual tax returns and issued nearly 110 million tax refunds.)

Sure, if you have a refund coming, you should file as soon as possible to get your money back. But there's no need to join the mad, and potentially dangerous, rush to the post office.

Exceptions to the good news

In some circumstances, you need to file on time even if you have a refund coming. Some relatively arcane elections must be made on a "timely filed" return. If you converted a traditional IRA to a Roth last year, for example, you need to file your 2011 return by midnight April 17 (or request a formal extension of the due date) to preserve you right to undo the conversion -- and thereby avoid paying tax on the amount moved to the Roth -- as late as this coming October 15.

If you owe money with your return, you can avoid both the late-filing penalty and the late-night rush to the post office by filing a Form 4868 by midnight April 17. You can file that form electronically from the comfort of your own home. The instructions for the form include several options for paying what you owe electronically, including the government's electronic federal tax payment system (EFTPS), which is free.

Filing the Form 4868 electronically by the deadline protects you from the government's stiff failure-to-file penalty, which is 5% of the amount due with the return for each month or part of a month you're late. (That's $50 a month for each $1,000 you owe.) But if you fail to pay what's due by the deadline, you will be hit with the failure-to-pay penalty, which is 0.5% a month of the amount due (or $5 a month for each $1,000 you owe).

A new break for the unemployed

This year, for the first time, the IRS will waive the failure-to-pay penalty for taxpayers who were unemployed for at least 30 days between the beginning of 2011 and this April's tax deadline. The same break goes to self-employed taxpayers who saw their 2011 income drop by 25% or more from 2010 levels due to the lousy economy. To qualify, your income must be $100,000 or less ($200,000 or less for couples), and you can't owe more than $50,000 in taxes.

To protect yourself from the penalty, you have to file a new Form 1127-A by April 17. And you still have to file your return -- or file a Form 4868 to request an extension of time to file -- by April 17.

Let's be careful out there.