IRS Changes rules for filing an extension

The IRS has altered the way it accepts filing for extension. Taxpayers now can ask for an automatic, six-month filing extension for business and individual returns.
The old IRS procedure was to allow an automatic four month extension; then, a 2 month extension request could be filed, but there had to be a reason with the second extension.
Lastly, a tax filing extension does NOT extend the tax-payment deadline.

Looking to really build up your Deferred Compensation?

If you have business, then you need to consider the following plan:
A Simplified Employee Pension Plan, commonly known as a SEP-IRA, is a retirement plan specifically designed for self-employed people and small-business owners.

To Establish the SEP
When establishing a SEP-IRA plan for your business, you and any eligible employees establish your own separate SEP-IRA; employer contributions are then made into each eligible employee's SEP-IRA.

Key features are highlighted below:
- Plan eligibility
- Tax advantages
- SEP-IRA deadline
- Contribution flexibility
- Plan eligibility

You can establish a SEP-IRA if you: Are a sole proprietor, in a partnership, or a business owner (of either an unincorporated or incorporated business, including Subchapter S corporations);
Earn any self-employed income by providing a service, either full-timeor part-time, even if you are already covered by a retirement plan at yourfull-time job. Top

Tax advantages Tax-deductible contributions-
Up to 25% of compensation, as much as $41,000 for the 2004 plan year and$42,000 for the 2005 plan year.*
Tax-deferred growth potential Any investment earnings grow tax-deferred until withdrawn.

* The maximum compensation on which contributions can be based is $205,000for the 2004 plan year and $210,000 for the 2005 plan year. For self-employed individuals, compensation means earned income. Top SEP-IRA deadline The deadline to open and contribute to a SEP-IRA is: Your tax filing deadline (including any extensions). For most self-employed individuals and small-business owners, thatdeadline is usually April 15.

2005 Tax Year IRA information

Question: Can I contribute to a traditional IRA if I have other retirement plans?
Answer: Yes, you can contribute to a traditional IRA whether or not you are covered by another retirement plan. However, you may not be able to deduct all of your contributions if you or your spouse is covered by an employer-sponsored retirement plan.
Also, note that contributions to a Roth IRA are not deductible and income limits apply.] See Publication 590 for further information.
Their is an effect if You Are Covered by a Retirement Plan at Work. If you are covered by a retirement plan at work, use the IRS tables to determine if your modified AGI affects the amount of your deduction.

IF your filing status is .(fill in status a,b,or c below).. AND your modified adjusted gross income (modified AGI) is ...
THEN you can take ...
(a) single or head of household(filing status) $45,000 or less a full deduction. OR more than $45,000 but less than $55,000 a partial deduction. $55,000 or more no deduction.
(b) married filing jointly or qualifying widow(er) $65,000 or less a full deduction.
more than $65,000 but less than $75,000 a partial deduction.
$75,000 or more no deduction.
(c) married filing separately 2 less than $10,000 a partial deduction.
$10,000 or more no deduction.

1 Modified AGI (adjusted gross income). 2 If you did not live with your spouse at any time during the year, your filing status is considered Single for this purpose (therefore, your IRA deduction is determined under the ?Single? filing status).