April 15th looms every year into every American's psyche like the hand holding the knife in Psycho. Lines form outside even the most rural of post offices, and accountants work their fingers to the bone trying to get everyone's income tax return filed before the midnight deadline. And while nothing may be certain other than death and taxes, as the old adage goes, April 15th is not really the end-all and be-all of income tax filing dates. Many can and do file for a tax return filing extension every year, making October 15th the actual date for doom and gloom and gleaming tax men's knives.
Sometimes, circumstances beyond the control of any well-meaning, good-intentioned tax payer can prevent filing a return by April 15th. If certain paperwork hasn't been sorted out, or certain documents can't be located, filing a tax extension is your best idea. It's better to have a well-prepared, complete income tax return than a poorly done, inaccurate one. Also, the IRS charges a penalty fee for every month that you do not file. You could end up paying, even if you qualify for a refund, if you don't file on time, or request an automatic six month extension on filing your tax return.
The IRS allows tax payers a six month filing extension without really asking you why you can't file on time. That is to say, there are no real qualifying circumstances that one must live up to in order to be granted an automatic six month stay on filing your tax return. It's actually quite easy to get an extension for filing your income tax returns. The IRS has a handy-dandy little one page form, Form 4868, that does all the hard work for you. Simply fill it out and send it in. NO question asked. Well, other than the ones on the form, that is. Now, the IRS can terminate your extension at any time during the six months, by notifying you in writing at least ten days prior to the termination date given. If this should happen, you will be required to file your tax return and pay any taxes due by the termination date specified in the notification letter.
Filing an extension does not mean, however, that you don't have to pay your taxes until October. All taxes due must be paid by April 15th. Period. NO exceptions. Each month you go without filing, the IRS can charge you a late filing penalty fee. So, even if you can't file on time, you'd better be really sure you don't owe anything before ignoring your taxes completely until October. You can file your Form 4868 electronically and make any payments due using your credit card. Even if you have to estimate your payment, no fees or penalty charges will be made against you as long as you get both the payment and the Form 4868 in by April 15th. Once you file your return between April 15th and October 15th, you simply note on the appropriate line of your return the amount paid with the Form 4868 and any additional payment, if any, that is still due to the IRS. Include the balance of the tax payment owed with your income tax return. You will be charged interest on any unpaid amount, even with the filing extension, and if you haven't paid at 90% of what is owed by April 15th, you'll be charged the aforementioned late-payment penalty. This is usually one half of one percent of the unpaid amount per month. Like I stated above, be really sure of how much you owe and be sure to pay it with your Form 4868 when you request your tax filing extension, or you'll be in even more hot water with the IRS.
If you are going to be out of the country come the middle of April and you haven't filed your return before you leave, you should definitely file for a tax filing extension. The IRS won't cut you any slack just because you are abroad on April 15th. You don't want to risk penalties and added expenses because your tax return in the mail was on the slow boat home. Filing a Form 4868 requesting an extension on filing your return will ensure that you are in good stead with the IRS, should your return not reach them by midnight April 15th. The IRS does give exception to those US citizens who choose to make their main residence and workplace in a foreign country. Military personnel stationed outside the US and Puerto Rico also qualify for this exception. These qualifying individuals are granted an automatic two month extension period for filing your return and paying any taxes due. (The IRS, however, will charge the aforementioned interest on any unpaid taxes between April 15th and June 15th.) If you are unable to file you tax return before June 15th, a further four month extension can be requested by filling in the Form 4868. Failure to file either your tax return or a Form 4868 by June 15th will result in late filing fees, as well as late payment fees for any unpaid tax amounts due.
Lastly, if you absolutely can not come up with the amount of taxes you owe the IRS by October 15th, you can file a request to make payments on installment. This is done by filling out Form 9465 and meeting certain eligibility requirements. Besides proving that you can not make the required tax payment, and that you owe less than $10,000, you must prove that for the past five years you have filed on time (or with a filing extension,) that you have paid all taxes due in the last five years, and that you did not need to enter into a payment installment arrangement at any time in the last five years. If you are married and filing a joint income tax return, your spouse must also meet the five-year eligibility requirements. If you meet these requirements, the IRS is obligated to grant you an installment payment arrangement. The late-payment interest fee is dropped from .5% to .25% per month for anyone using installment payments to pay their tax amount due.
So, whether you'll be traveling out of the country, missing certain vital documents or simply haven't got the time to get together with your accountant, the IRS does give you a break on filing your income tax returns. While not an out, because you still have to pay any taxes due, and you will eventually have to file that pesky return, filing for an extension to file may just save you some heartache and trouble (and eerie music while you're in the shower.)
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1040-Tax Extension will file your online tax extension with the IRS and guarantee that the IRS will accept your application. Visit us online for automatic extension on your individual tax return.
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