So what do you do? The Tax Cat has taken a break from his vacation to let us know that those of you who were unaware that sending your tax refund to your IRA would send your stimulus check to the same account can withdraw the rebate without incurring any penalties:

To qualify for this relief, funds must be taken out by April 15, 2009, in most cases. Without this relief, taxes, penalties and other special rules would apply to amounts removed from these accounts. Regular refunds are not eligible for this relief.

Eligible tax-favored accounts include traditional and Roth IRAs, health savings accounts (HSAs), Archer MSAs, Coverdell education savings accounts (ESAs) and qualified tuition programs, also known as QTPs or 529 plans. Thus, for example, a taxpayer whose $1,200 stimulus payment is directly deposited into his or her IRA can take out anywhere up to $1,200 from the IRA, tax-free and penalty-free.

In general, the deadline for these withdrawals is the due date or extended due date for filing a 2008 return. This means April 15, 2009, for most taxpayers, or Oct. 15, 2009, for those who obtain tax-filing extensions.

Information on how to claim this relief will be included in your 2008 tax instructions.

Relief for Stimulus Payments Withdrawn from IRAs and Tax-Favored Accounts
[IRS]
Tax Cat [Facebook]

5. Myth: The tax rebate is taxable income and I'll have to pay taxes on it next year.

Fact: The rebate is a rebate. It is not taxable income. You will not have to pay taxes on this money.

4. Myth: People who aren't normally required to file a tax return can't get the rebate.

Fact: If you have at least $3,000 in certain types of income, you may be eligible for the economic stimulus payment. People who qualify include Social Security Recipients, Veterans Affairs Recipients, Railroad Retirement Recipients, and Low-Wage Workers.

3. Myth: The IRS will call or email you about your rebate check, and they can help you get it faster if you give them your bank account information.

Fact: The IRS is not going to contact you about speeding up this rebate check, and they never contact anyone via email. Ever. At all. Filers who used direct deposit will see their money more quickly, but no one can help you get it "faster." You will receive your money based on the last two digits of your social security number. You can check out the schedule by clicking here. Don't give out your banking info to scammers!

2. Myth: I don't qualify for the rebate because I'm a stay-at-home mom and don't make $3,000.

Fact: If you're married, filing a joint return, and have $3,000 in taxable income between you — you qualify for the rebate.

1. Myth: This is just an advance on next year's tax return! I'll get less next year!

Fact: This is incorrect. Marketplace's Tess Vigeland figured out where this silly little rumor was coming from: "the last time the federal government issued checks, back in 2001,the stimulus was indeed an advance, of sorts, on the Bush administration's tax cuts. The bottom line went from 15 percent 10 percent. So, maybe folks are assuming that it is the same this time. It is not. This is not an advance on next year's refund."

We know you're all sad that tax season is over, but you can always snuggle up to Tax Cat on Facebook.

(Photos:Chad Beckerman)

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If you just remembered about this whole 'paying The Man' thing, don't fret, here's our tax advice from the past few months, much of it brought to you by our adorably knowledgeable helper, Tax Cat:

• 
  
• Tax Tip For Lazy People: How To Get An Extension On Your Income Taxes
• 
  
• Tax Cat: Help! I Owe The IRS Money And I Don't Have Any!
• 
  
• Tax Cat: Let's Learn About "Necessary And Ordinary Business Expenses"
  
• 
  
• Tax Tip: Mortgage Forgiveness Debt Relief Act of 2007
• 
  
• Avoid An IRS Audit
• 
  
• What to Do If You Can't File Your Taxes on Time
• 
  
• Don't File Taxes? You Gotta To Get A Stimulus Check
• 
  
• Choose A Qualified Tax Preparer
• 
  
• Tax Cat: Let's Learn About "Necessary And Ordinary Business Expenses"
• 
  
• 19 Free Tax Services Tested And Rated
• 
  
• What Do I Have To Do To Get My $600 Tax Credit?
• 
  
• Who's Afraid of Taxes? Not You!
• 
  
• What To Do If You're Missing Your W2
• 
  
• 2007 Federal Tax Law Changes
• 
  
• 6 Tax Credits That You Shouldn't Overlook
• 
  
• Low Income? You May Qualify For Tax Saver's Credit
• 
  
• Tax Tip: Home Offices Are Worth The Deductions If You Qualify
• 
  
• Self-Employed? Here's How To Do Your Taxes
• 
  
• Get Basic Tax Info With Publication 17
• 
  
• Don't Forget To Claim Your Student Loan Deduction
• 
  
• Which Tax Records You Should Keep
• 
  

Don't worry, it's not the end of the world. It will, however, affect you in the following ways:

1. It may delay your stimulus rebate.
2. It will not delay the deadline for paying taxes if you owe them.
3. It will make you grouchy and stressed out until October 15, the new deadline.

As you can see, you should really just file your taxes on time. If you can't, allow us to introduce you to your new best friend — IRS Form 4868 (PDF). Enjoy!

IRS Urges Taxpayers To e-file Extension Requests by April 15 Filing Deadline [IRS]

Here's what to do when you owe the IRS and don't have any money:

Taxpayers should file their return on time, pay as much as they can with their return and use IRS.gov if they need to request a payment agreement.

Interest and penalties add up for people who don't file and pay on time. But taxpayers can limit these charges by filing on time and paying sooner.

Though interest, currently at the rate of 6 percent per year and late payment penalties, normally 0.5 percent (1/2 of 1 percent) per month, apply to any tax paid after the April 15 deadline, taxpayers can limit these charges by paying sooner. In addition, by filing on time, a taxpayer avoids the much larger 5-percent-per-month late-filing penalty. For example, a taxpayer who files on May 1, owing $1,000 in tax, would be charged interest plus a $50 penalty.

So remember, if you owe money and can't pay it—file your taxes on time anyway and use the IRS's online payment agreement calculator. By entering some basic information about your tax situation, eligible taxpayers can set up either a short-term payment extension or a monthly payment plan.

A short-term extension gives a taxpayer up to 120 days to pay. No fee is charged, but the late-payment penalty plus interest will apply.

If you owe less than $25,000 and would like to know whether or not you qualify for a payment agreement, click here

Online Payment Agreement (OPA) Application [IRS]

(Photo:Chad Beckerman)

Tax Cat sez: You need to follow the IRS's guidelines and only write off "necessary and ordinary business expenses."

Here's the important part of the tax code:

Internal Revenue Code § 162. Trade or business expenses. (a) In general. There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business...

What does this mean?

Well, there are lots and lots of things you may be able to deduct. Here are a few:

• Office equipment
  
• A Home Office
  
• Sales tax on business purchases.
  
• Professional fees. (This includes tax professionals who'll do all this crap for you.)
  
• Health Insurance premiums
  
• Auto expenses.
  
• ... and more!

Here's a helpful list. If you have a business expense that isn't mentioned on the list, that doesn't necessarily mean you can deduct it.

The Laugh Test

From NOLO.com:

"Ordinary" has been held by courts to mean "normal, common, and accepted under the circumstances by the business community." "Necessary" has been taken to mean "appropriate and helpful."

Given these broad legal guidelines, it is not surprising that some folks have tried to push the envelope on "ordinary and necessary" business expenses, and the IRS has pushed back. Sometimes a compromise is reached, and sometimes the issue is thrown into a court's lap.

Example

Mr. Henry, an accountant, deducted his yacht expenses, contending that because the boat flew a pennant with the numbers "1040," it brought him professional recognition and clients. The matter ended up before the tax court. The court ruled that the yacht wasn't a normal business expense for a tax professional, and so it wasn't "ordinary" or "necessary." In short, the yacht expense was personal and thus nondeductible. (Henry v. CIR, 36 TC 879 (1961).)

Tax professionals frequently rely on the "laugh test": Can you put down an expense for business without laughing about putting one over on the IRS? In the example above, the tax court laughed the accountant and his yacht out of court.

Understanding Small Business Tax Deductions [NOLO]
(Photo:Chad Beckerman)

Tax laws consider forgiven debt as income, which can leave those of you with foreclosed homes with some unexpected tax bills this year. Let's say I loan you a million bazillion dollars. Now I go, "Oh, wait. Never mind. You can keep it." The IRS considers that income. You would have to pay the taxes on your million bazillion dollars.

The tricky part comes in when I'm not just loaning you a million bazillion dollars. I'm loaning you money to buy an overpriced home that you can't afford and I can't sell for as much as you owe me once I take it back from you.

Enter the Mortgage Forgiveness Debt Relief Act of 2007. Bankrate sums it up for us:

Under the Mortgage Debt Forgiveness Act of 2007, some homeowners granted forgiveness of mortgage debt won't have to pay taxes on that amount. But there are some restrictions:

1. There is a limit on the forgiven debt: up to $2 million or $1 million for a married person filing a separate return.
2. The tax break also has a time limit. It only applies to mortgage debt discharged by a lender in 2007, 2008 or 2009.
3. The loan also must have been taken out to buy or build a primary residence, not a second or vacation home. If debt is forgiven on those additional properties, the owner will owe cancellation of debt income as usual.

10 Tax Laws You Just Gotta Know [Bankrate]
IRS Form 982 (PDF) [IRS]
March 3: The latest tax-filing deadline [Don't Mess With Taxes]
(Photo:Chad Beckerman)