Today’s the day: April 15, Tax Day.
If you still don’t have your taxes done, don’t sweat it. You have options.
The easiest: File Form 4868. Doing so will automatically extend your tax filing deadline by six months.
The catch, however, is that it does not extend the amount of time you have to pay the government if you owe a balance.
“A lot of people when they want to extend the filing of their tax return, they think, ‘OK, I just filed Form 4868 tax extension, OK, I’m good’—but that form is only an extension to file your return,” Amy Wang, senior manager of tax policy and advocacy for the American Institute of CPAs, told Grow earlier this year. “It’s not an extension to pay what you owe. So you still need to, at the best of your ability or hire a tax professional, calculate what you think you will owe for the year and pay that tax liability by April 15.”
The instructions for Form 4868 offer some guidelines on estimating that bill.
Fail to pay by today’s deadline, and your unpaid balance can be subject to interest and penalties. The failure-to-file penalty is typically 0.5% of the unpaid amount for each month or part of the month the debt remains unpaid, while the current underpayment interest rate is 6%.
Your second option, of course, is to buckle down and finish your taxes today. The IRS estimates it takes a typical tax filer seven hours to fill out Form 1040, including two hours of record keeping and four hours completing and submitting all forms. That’s not impossible, depending on when you read this and what else you have to do today.
Failing to file a return will trigger penalties. The typical fee is 5% of the tax owed for each month or part of a month your return is late. Once it’s 60 days past due, the minimum penalty is $210 or 100% of the tax owed, whichever is less. You’ll also accrue failure-to-pay penalties.
If you’re not sure whether you should try to make the tax deadline or file an extension, consult with a tax professional—don’t feel pressured to do it alone.
“We’re tax professionals and we think about taxes all the time, but when you’re not a tax professional...you're not thinking a lot about taxes,” says Robert Kerr, executive vice president of the National Association of Enrolled Agents.
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