As the April 18 tax deadline approaches, some Americans are still waiting for one or two forms to trickle in. And others, who have had all their paperwork for a while, simply can’t find the time or the patience to actually fill out their Form 1040.
But whatever your reasons for being behind on tax prep, take heart: If you want an extension on filing, the Internal Revenue Service will give you one – no questions asked.
“Generally, any taxpayer can file for an extension of six months for any reason,” said John Piershale, a certified financial planner and certified tax specialist at Piershale Financial Group in Illinois. “The only requirement is that you file for the extension on time.”
Filing for that extension involves filing Form 4868 by the April 18 deadline, which will extend the due date of your full return for six months to October 16, 2017.
This is very easy for anyone who expects a refund. However, if you anticipate owing taxes to the IRS, you must provide an estimated payment or face penalties, said Leslie Thompson, a certified public accountant and managing principal at Spectrum Management Group in Indianapolis.
“Any unpaid balance (at the April 18 deadline) will accrue interest until paid in full,” Thompson said. That means you’re paying interest until October even if you don’t have to file the rest of your paperwork until then. Additionally, a late payment penalty may be charged if you do not pay at least 90% of the taxes you owed in the prior year by the regular due date, she said.
Don’t make the mistake of finding you have a tax bill and then burying your head in the sand, Piershale added. “The IRS has options if you can’t pay all the tax on time, like installment agreements,” he said.
And even if you pay nothing at all, it’s still it’s important to file your taxes or an extension on April 18 all the same. That’s because the penalty for late filing can be 10 times higher than for simply making a late payment; the IRS charges an additional 5% on taxes owed for every month you fail to file, and a penalty of 0.5% per month on unpaid taxes you owe.
For these reasons, Thompson said she advises always filing in April. That’s not just because of the risk of penalties on taxes owes, but also because of recent increases in tax fraud where someone steals your identity – and your tax refund – while you wait.
“Early and timely filing reduces the risk that fraudsters file a fraudulent return prior to your final filing.” Thompson said. “So while filing for an extension is a simple process, filing your return by the original due date is advised.”
Jeff Reeves is executive editor of InvestorPlace.com
