How to Get a Tax Extension
It’s pretty common for taxpayers to feel overwhelmed with the tax-filing experience, especially when they realize that they’re either not ready to file or not ready to pay their taxes. It may seem that the IRS may be really strict because it stresses so much that no one can file or pay after April 15; however, there are exceptions to this rule.
If you’re looking to get a tax extension. you may be eligible. However, it’s important to know that there’s a difference between an extension to file and an extension to pay. If you don’t know the difference between the two, you could find yourself up a rocky creek without a paddle.
Extension to File Your Taxes
If you have had a rocky tax season and have complicated situations that you need to account for, it may take some time to get your tax forms together to file. It is for this reason that some decide to ask for an extension to file their taxes. The IRS grants an automatic six-month extension of time to file, which makes the process much easier. (Figure out which tax form you need now )
In order to get this extension, you must fill out a Form 4868. which is the Application for Automatic Extension of Time to File U.S. Income Tax Return. As long as you fill you fill out this form and file it by April 15, you won’t be penalized.
Extension to Pay Your Taxes
If you have some or none of your tax liability to pay by April 15 and need more time then you may be granted an extension to pay your taxes. However, you must remember that an extension to file is different from an extension to pay. If you are granted an extension to file and then don’t pay your tax liability, you will still be penalized, unless you file for
However, if you speak to an IRS representative, you will mostly likely be granted the right to file on time and pay later. Then you will receive a letter in the mail from the IRS telling you when the payment is due – this could be as much as 45 days to 6 months after filing.
Also, keep in mind that asking for an extension is not the same as asking for an installment plan. The installment plan, which requires Form 9465. usually requires that you pay between $50 and $100 to get started. The extension is free.
Whether you’re looking for an extension to file or pay your taxes, it’s important to speak with the IRS and file necessary forms on time. If you don’t, you could face some serious penalties:
- Failure to file penalty: If you fail to file an extension to file your taxes by April 15, you will suffer a “failure to file” penalty. This penalty can be as much as 5 percent of the balance due per month with a max of 25 percent of the taxes owed. This is pretty steep, which is why it’s important to file or extend on time.
- Failure to pay penalty: On the other hand, if you fail to pay, or file an extension for your taxes, you could owe more than 10 percent of your final tax liability – or $1,000 – whichever is more. This penalty is usually 0.5 percent per month.
In addition to the penalties, you could owe as much as 8 percent in interest for the time that the balance wasn’t paid. So not only is filing and paying your taxes, or asking for extensions by April 15 required, it is wise. The last thing you need is to owe a large amount only to be penalized even more just for being late.Source: www.gobankingrates.com