You started the year determined to get your tax return completed way before the deadline. Then life happens, and filing your taxes almost becomes an after-thought. Even though we’re a few weeks away from Tax Day and it might sound like a lot of time, it’ll literally be here before you know it. The sooner you get started on that return, the more options you'll have for getting it done smoothly.
If you’re overwhelmed, under pressure, and don’t know where to begin, save yourself the anxiety by turning to a Tax Pro. If you won’t be ready by the deadline, filing for a federal tax extension has its perks. While an extension won’t get you out of paying your taxes by the regular tax deadline, it will give you more time to ensure you’re taking advantage of the right tax deductions before you file your tax return with the IRS. You may be asking, isn’t the whole point of getting a tax extension so that you don't have to pay right away? Unfortunately, it’s not.
There are some still waiting for one or two forms to trickle in, and others who have had all their paperwork for a while, but simply can’t find the time (or the patience) to actually file. Whatever the reason: If you want an extension to file your income taxes, the IRS will give you one, NO questions asked. The beauty of the tax extension is that it gives you more time to file your taxes, but don't be late filing the extension itself. You MUST file for an automatic six-month extension by Tuesday, April 17 in order to have your deadline pushed back to October 15, 2018.
The penalty for filing late is:
The penalty for paying late is 5-percent for every month that the outstanding tax is not paid.
The maximum penalty for paying late is 25-percent of the total.
After 60 days, the minimum penalty is $205 or 100-percent of the balance due, whichever is smaller.
Filing a tax extension keeps you in good standing with the IRS on the forms side, but a tax extension doesn’t grant you more time to pay what taxes you owe beyond the tax due date. Don’t let your inability to pay prevent you from filing on time; avoiding filing your return because you can’t make a tax payment will only make matters worse. An IRS Installment Agreement is generally a much better choice. Keep in mind that you’re considered to have reasonable cause for the period covered by this automatic extension and can avoid penalty if:
At least 90% of the total tax on your 2017 return is paid on or before the regular due date of your return through withholding, estimated tax payments, or payments made with Form 4868.
The IRS compounds interest daily and penalty assessments monthly. Compounding interest and penalties simply means the amount assessed today becomes part of your principal tomorrow, and is subject to the next assessment for interest and penalty. So you can count on any balance due to the IRS to grow rapidly! Filing an extension can remove the failure-to-file penalty, which is the larger penalty on a monthly basis, but it will not remove the failure-to-pay penalty which will add an extra 0.5 percent each month to your overall IRS debt.
If you’re in need of an extension, we’re here to help you get it. Don’t put off completing your required taxes; talk to a Tax Pro today to understand your specific situation.