It is that time of year again with Uncle Sam knocking at your door ready to collect your tax return and any taxes owed. Having to live through a tough economy is bad enough, not to mention paying lavish filing fees or more than your fair share in taxes.

Here are a few pointers to reduce your filing fees and circumvent IRS filing/underpayment tax penalties during these difficult economic times.

Guidelines to Follow To Prevent Common IRS Filing and Underpayment Penalties:

1. File Your Tax Returns No Matter What – Even if you are unable to pay all of taxes you owe, failing to file will cause you to owe more taxes than you originally owed (5% per month penalty on the balance but cannot be larger than 25%). If you cannot file by April 15th, you can request a 6-month extension which will give you until October 15th to file. This is not an extension to pay but only an extension to file. Use IRS Form 4868 to file your extension.
2. Pay All Your Taxes or As Much As You Can By April 15th – The IRS wants 90% of the taxes you owe by 4/15, otherwise you may face a failure to pay penalty of .5% per month (compounded monthly). This penalty can rise to 1% percent per month if the IRS sends you a letter requesting payment and you do not respond. Remember, the more you pay now, the less you pay later. Besides the failure to pay penalty, there is also an underpayment interest rate that accrues on any unpaid balance (currently 4%, but it can change quarterly).
3. Be Honest When Filing Now More Than Ever – The IRS and State tax revenue collectors have received increases in funding to catch tax evaders, and improve the enforcement of tax laws. Don’t overstate deductions, understate your taxes, or do anything frivolous on your tax return. The two relevant penalties here is the "Substantial Understatement" and "Negligence Penalties" which can leave you with a 20% penalty on the understated tax amount.  If anything, with tax revenues declining, this is the worst time to try to short your State or the Feds.

Guidelines to Help Lower Filing Fees or Get Help With Filing Your Taxes:

1. Take Advantage of FreeFile or Walmart’s Free Assistance (If You Qualify) – The IRS provides a free online service very much like TurboTax called FreeFile. FreeFile is only for individuals with an Adjusted Gross Income that is equal to or lower than $57k. Remember, your AGI is Gross Income minus deductions. The FreeFile program will available at the IRS.gov website starting 1/15. Furthermore, the Walmart Foundation provides a free Mobile Tax Van unit for taxpayers who made $56k or less. To find out when this mobile tax unit will at your nearest Walmart go to myfreetaxes.com on 1/18.
2. Capitalize on the IRS’s VITA, TCE Program, or Military Personnel Programs (If You Qualify) – The IRS has a program called the Volunteer Income Tax Assistance Program (VITA) for those taxpayers who made around $49k or less in 2009 or who will have trouble filing their own taxes. VITA volunteers are sponsored and you can meet them at various locations around the country. Moreover, if you are 60 or older you can take advantage of the Tax Counseling for the Elderly Program (TCE Program). To find the closest VITA location or if you are interested in the TCE program call 1-800-829-1040. Last but not least, military personnel  ("Army, Air Force, Navy, Marine Corps, and Coast Guard") and their families are eligible for free tax advice and preparation within their installations.
3. Mail Your State Tax Return – If you have ever used TurboTax, TaxAct or any other tax preparation computer software, you will be well aware that these programs charge extra fees to eFile State tax returns. Do you need your tax return refund back ASAP? If not, why blow $25-50 dollars when you can just mail it! If you are worried it will get lost in the mail, send it via certified mail.

Good Luck!

With a concentrated effort and good luck (you always need that when doing taxes!), hopefully you will breeze through this tax season.

Remember: The best defense is a good offense. You should start preparing for next years taxes this year. If you follow those tips, it will take the stress out of filing taxes!