If you still haven't filed your 1999 tax return, Martin Nissenbaum, director of income tax planning at Ernst & Young, will chat about last-minute tax-filing issues today at 5 p.m. EDT on Yahoo! Come armed with questions. Register for Yahoo! chat at chat.yahoo.com. It's free!

I asked for a second extension of time to file my taxes, but I never heard a thing. Does that mean I got it? Or if not, does it matter?

-- Ted Jastki

Ted,

It's too late to worry about this now. Just file your 1999 tax return by Oct. 16. (The regular Oct. 15 deadline is a Sunday this year, so you get an extra day.)

If you paid your tax bill in full with your first extension back in April or if you're expecting a refund, you don't have to worry about owing interest and penalties, says Don Roberts, spokesman for the

Internal Revenue Service

. So approval of the second extension becomes irrelevant.

But if you still owe Uncle Sam money, then be prepared to cough it up.

If you didn't pay your tax bill in full back in April, you will owe interest on that amount, calculated from April 17 (April 15 was a Saturday this year.) until you pay. In addition, if you didn't pay at least 90% of your balance in April, you will owe a late payment penalty.

Finally, if your second extension was not approved (It's not automatic, like the first one.), you may be hit with a late filing penalty, and the tab began running on Aug. 15, the day your application for a second extension was due.

You can try to have those late-filing and late-payment penalties waived if you have a copy of your

Form 2688

-- Application for Additional Extension of Time To File U.S. Individual Income Tax Return

and can prove that you mailed it on time, says Maggie Doedtman, a senior tax research and training specialist at

H&R Block

in Kansas City, Mo.

Before you tally all your fees, call the IRS hotline at 800-829-1040. If you're lucky enough to get someone on the phone, ask to have your account checked to see if your second extension was approved.

Here's a tip for next year: If you haven't heard from the IRS for more than a month after you send in a second extension request, call and find out what's up.

Roth Contributions Tanked

If you make the maximum contribution into a Roth IRA early in the year, but later find that your income level for the year will exceed the maximum allowable to make a Roth contribution, my understanding is that you have to recharacterize the contribution and any investment gains into a traditional IRA. But what if your investment for the year decreased in value? Suppose you invested the full $2,000 in stocks that decreased in value to $1,000. What amount do you recharacterize -- $2,000 or $1,000? If the rule is to recharacterize the full $2,000, wouldn't it be more beneficial to simply withdraw the remaining Roth investment and take the capital loss? -- Christopher Chan

Christopher,

You are sailing in uncharted territory here. There is nothing written in the IRS tomes that specifically addresses this situation. I guess

Congress

TST Recommends

just assumed the go-go market would go on forever.

Typically, to be eligible to contribute to the Roth, your adjusted gross income must be below $95,000 if you're single (Contributions are phased out up to $110,000.) or below $150,000 if you're married (Contributions are phased out up to $160,000.). If you're married and filing separately, contributions are phased out between zero and $10,000.

If you contributed the full $2,000 and you since have realized your adjusted gross income has exceeded the limitation, you must pull out that contribution -- or recharacterize it -- to avoid getting hit with excess contribution penalties.

If your contributions have increased in value while in the Roth, you must withdraw those earnings as well. And you'll owe tax on them.

Even our experts were stumped when asked what to do about contributions that have declined in value. But we've come up with some reasonable solutions for you.

If the Roth account has a balance greater than $2,000, you can pull out your $2,000 contribution and move it to a nondeductible IRA. Since all contributions to a nondeductible IRA are after-tax, there is no adjusted gross income limitation on contributions. And the money is still set aside for your retirement.

If, on the other hand, that $2,000 contribution was the only money in the account, you could simply convert the entire account to a nondeductible IRA. Again your adjusted gross income does not matter. Check out our

Roth IRA Tax-Reporting Guide for more details on how to convert your Roth IRA back to a nondeductible IRA.

Of course if that was your only contribution, you could just close the account and withdraw the remaining $1,000. Since your original contribution was $2,000, you do have a $1,000 loss that you should take as a miscellaneous itemized deduction.

Unfortunately, the rules say you cannot recognize that loss until all your IRA accounts -- both traditional and Roth -- are empty, says Martin Nissenbaum, director of income tax planning at

Ernst & Young

.

If this Roth was your

only

IRA account, you could report that $1,000 loss on line 27 of your

Schedule A

-- Itemized Deductions

, says Nissenbaum. If you don't itemize, you cannot report that loss.

And you thought the Roth was supposed to be an

easy

way to save for retirement.

Send your questions and comments to

taxforum@thestreet.com, and please include your full name. Tax Forum appears Tuesdays, Thursdays and Saturdays.

TSC Tax Forum aims to provide general tax information. It cannot and does not attempt to provide individual tax advice. All readers are urged to consult with an accountant as needed about their individual circumstances.