Can’t Complete Your Return by April 15th?
Midnight, April 15th, 2013 is fast approaching. Much too fast for many taxpayers. If you are one of the 20% to 25% of Americans that submit your returns during the final two weeks of tax season, you are far more likely to fall into the 5% to 7% who will file an extension. If you are anticipating filing an extension rather than a return by April 15th, keep the following in mind.
1. Filing Extension Does Not Extend Payment Due Date.
The IRS will automatically give you a six-month extension to file your return (provided that you file for the extension by April 15th). However that extension to file is an extension solely to file your income tax return. It is not an extension of time to pay the IRS any tax you owe. So just because you have not finished sorting through that shoe box of receipts, if you know you will owe tax it is best to go ahead and send the IRS payment. Any tax owed and not paid by April 15th will incur interest – and possibly late payment penalties – until paid. You can use your previous year’s tax return to give you an idea of how much you will owe for 2012, if your financial situation has not changed drastically since your previous year’s filing. Even if it has, you can use rough “ballpark” figures to better evaluate your tax amount range. Then after you have sorted through those receipts and submitted your return by October 15th, you would only owe interest and late payment penalties on the portion remaining outstanding. Or better yet, you might have overpaid and be due a refund! Either way, If you can make any payment toward what you think you owe, pay it by April 15th and file your return by October 15th.
2. Don’t File an Extension Just Because You Can’t Pay.
If you have completed preparation of your 2012 return and it is ready for submission to the IRS, do not postpone filing through an extension merely because you cannot pay the amount of tax you owe. The IRS offers options for paying the amount you owe over time as well as options for assisting taxpayers who cannot pay due to financial hardship. Keep in mind that as long as you owe a balance to the IRS, interest and [possibly] penalties will continue to accrue on that balance. In order to keep the amount you owe the IRS from “snowballing” out of control, apply for a payment plan or installment agreement when filing your return. You can apply for a payment plan by using the Online Payment Agreement tool on the IRS’ website here: [url href=”http://www.irs.gov/Individuals/Online-Payment-Agreement-Application” title=”IRS Online Payment Agreement Tool” ]IRS Online Payment Agreement Tool[/url]. You can apply for an installment agreement with the IRS by including this request form with your return: [url href=”http://www.irs.gov/pub/irs-pdf/f9465.pdf” title=”IRS Form 9465, Installment Agreement Request” ]IRS Form 9465, Installment Agreement Request[/url]. You can also contact the IRS directly at (800) 829-1040 to discuss options if you are unable to make payments due to a financial hardship. Whatever your financial situation may be, If you have your return completed, file it. Period.
3. Use IRS Free File to File an Extension.
If you need to file an extension, you can do so online through the IRS’ website. Note however that whereas there are many portals and programs through which to electronically file your tax return, an electronic extension can be filed only through the IRS’ website directly. If filing an extension, this method is preferable for most taxpayers, because the IRS will acknowledge receipt of the extension request – assuring you that it has reached the IRS by the April 15th deadline. Remember if using this method, that you must submit the request by midnight on the deadline. This service is free to everyone, and accessible here: [url href=”http://www.irs.gov/uac/Free-File:-Do-Your-Federal-Taxes-for-Free” title=”IRS Free File Extension” ]IRS Free File Extension [/url]. If you want confirmation that you met the filing deadline, use the Free File portal.
4. Use IRS Form 4868 if You Prefer Paper Filings.
If you prefer the old-fashioned way, paper forms can be sent via regular mail. The form still must be submitted to the IRS by April 15th. The extension request form is available here, complete with directions on where to file: [url href=”http://www.irs.gov/pub/irs-pdf/f4868.pdf” title=”IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return” ]IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return[/url].
5. Pay as Much as You Can with Electronic Funds Withdrawal.
If you e-file your extension request, you can use the electronic funds withdrawal system to submit any payment you wish to make at that time. In order to utilize this service to authorize an electronic funds withdrawal, you must use a checking or savings account. When you have those account numbers handy, the withdrawal system is accessible through an option in the e-file portal. The instructions on how to choose this option can be accessed here: [url href=”http://www.irs.gov/uac/Pay-Taxes-by-Electronic-Funds-Withdrawal” title=”IRS Electronic Funds Withdrawal” ]IRS Electronic Funds Withdrawal[/url].
Either 1040 or 4868 … Make sure Your’s reaches the IRS by April 15th