We have only a few DAYS left before the filing season is over. Extending the due date of filing your returns will let you file up to October 15th this year. BUT, it does not give you extra time to pay any taxes owed. Usually Dennis and Karen are diligent about filing their tax returns, and that explains why they prepare early. That way they have time to go through last minute checks and cross-checks to reduce or eliminate any mistakes in the process. But, in case you are unable to meet the deadline, you should know about your options.
We expect to see a lot more taxpayers filing their tax returns late because, if they have their extensions filed and they owe taxes, the penalty for late payment of your taxes, is only one-half of one percent (1/2 of 1%). There is also a penalty for not filing your returns, and another penalty for under payment of taxes.
Many of us are still scrambling to get our taxes together. So, if you are not prepared to file the tax return by the April deadline, what happens if you can’t get your taxes done by the due date? If you need more time, you can get an automatic six-month extension from the IRS. You don’t have to explain why you’re asking for more time, either.
Here are a few important things to know about filing an extension:
If you complete your tax return, but can’t pay the taxes you owe, file your return on time and pay as much as you can. That way you will avoid the late filing penalty, which is higher than the penalty for not paying all the taxes you owe on time. Plus, you do have payment options. Apply for a payment plan using the Online Payment Agreement tool on www.IRS.gov . You can also file Form 9465, Installment Agreement Request, with your tax return. If you are unable to make payments because of a financial hardship, the IRS will work with you. Filing an extension on time will reduce your tax penalties by a LOT! Late filing penalties go from 5% of the tax owed down to ½ of 1% of the tax owed, with an extension!!
An extension to file will give you six more months to file your taxes, until Oct. 15. It does not give you extra time to pay your taxes. You still must estimate and pay what you owe by the April deadline (usually April 15th). You will be charged interest on any amount not paid by the deadline. You may also owe a penalty for not paying on time. But filing an extension will reduce the penalty (see #1 above).
You can use IRS Free File to e-file your extension request. Free File is only available through the IRS.gov website, and there are income limitations. You must e- file the request by midnight of the April deadline. If you e-file your extension request, the IRS will acknowledge receipt, via email.
You can also request an extension by mailing a Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You must submit this form to the IRS by the April due date. Form 4868 is available on www.IRS.gov .You don’t need to submit a paper Form 4868 if you make a payment using an IRS electronic payment option. The IRS will automatically process your extension when you pay electronically. You can pay online or by phone.
If you e-file an extension request, you can also pay any balance due by authorizing an electronic funds withdrawal from your checking or savings account. To do this you will need your bank routing and account numbers.
You can also request filing IRS form 1127 if there is a financial hardship that does not allow you to send money in with the extension or the tax return. This form does NOT give a free pass not to pay taxes. The form provides for NOT having to pay penalties and the interest on penalties IF you can prove financial hardship. Death, Disability, High Medical Bills, Bankruptcy and Disasters are examples of reasons the IRS will accept financial hardship requests.
Here are some points to consider for this period:
Call today, don’t delay! See how this affects you. We can be reached at 602-264-9331 and on all social media under azmoneyguy.