Don’t ignore taxes, even if you’re strapped

Q: What should I do if I don’t have the money to pay my taxes this year? — G.N., Opelika, Alabama

A: First, understand that even if you can’t pay a penny, you need to file your return on time. Failing to do so will result in penalties. So file that return — and pay as much as you can, as that will minimize any penalties or interest charges.

When it comes to an inability to pay, you do have options, which you can discuss with the IRS itself by calling 800-829-1040. The IRS might be able to offer you a brief extension, a payment installment plan or an “offer in compromise,” in which it gives you the chance to settle your obligation by paying less than you originally owed. The IRS might even be able to waive any penalties, although you will still owe any interest accrued.

If you’re thinking of solving your problem by charging your taxes to a credit card, think again if that debt is going to remain unpaid for a long while, racking up interest charges at perhaps 20 percent or more annually. (Creditcard service providers will also charge you a “convenience” fee, which can be rather inconvenient.) A bank loan might be better, possibly charging you less than the IRS’ interest and penalties.

Q: When changing brokerages, can I have my entire portfolio transferred to the new brokerage without having to sell anything and without generating any taxable gains? — T.W., Essexville, Michigan

A: Yup. Your new brokerage will likely be able to help you switch seamlessly. No selling or taxable gains need be involved.

Fool’s School:

Resist the crowd

One of the best ways to make money in stocks is to be a “contrarian” investor, going against the crowd. Superinvestor Warren Buffett would probably agree, having said, “I like to be fearful when others are greedy, and greedy when others are fearful.”

That’s much easier said than done, though. When the market is undergoing one of its occasional crashes, and gobs of investors are selling shares in a panic (thereby pushing stock prices even lower), it takes a lot of discipline to hang on to your holdings. It takes an even stronger stomach to buy shares of stocks that others are selling — but that’s often the best time to do so, as you can buy into great companies at depressed prices.

Meanwhile, when the market has been booming and many people are seeing great gains in their stocks, it’s often a bad time to buy, as shares might have been bid up to overvalued levels and be due to retract a little soon.

When many investors turn away from a company, that could be an ideal time to consider buying shares. Plenty of great companies fall on temporarily tough times. Just be sure to research the situation thoroughly and determine whether its problems seem likely to be short-term instead of long-term.

It can also be effective to keep a chunk of your money on the sidelines, waiting for a great opportunity or two. Buffett, for example, talks about waiting for “fat pitches” to swing at. Name that company

I trace my roots to 1902, when a “Golden Rule” store was opened in Kemmerer, Wyoming. Some 12 years later, I launched the privatelabel Marathon Hats brand, followed later by Gaymode hosiery, Silver Moon lingerie, Big Mac work clothes and Towncraft menswear. I went public a week before the stock-market crash in 1929. In 1963, I launched my first catalog. Today, I’m a major apparel and home= furnishings retailer, with about 875 stores nationwide. I have more than 2,500 suppliers, employ more than 100,000 people and rake in more than $12 billion annually. Who am I?

Last week’s answer

I’m the product of a 1989 merger of two companies that traced their roots back to 1858 and 1887, respectively. One company’s first product, a laxative mineral salt, was a best-seller. The other had the largest penicillin production plant in the world by 1943. Today, I employ roughly 25,000 people and am based in New York City. Who am I? (Answer: Bristol-Myers Squibb)