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Your Tax Filing Extension Option at Tax Deadline Time

The April 15th income tax filing deadline is rapidly approaching.  If you haven’t begun gathering your records and submitting your information to your tax preparer, you may be better off requesting an extension of time to file your return.

Regardless of your income, you may request an extension that will give you an additional six months to file a completed return.  An extension gives a taxpayer until October 15th to file a completed return.  However, the extension of time to file the return does not extend the time you have to pay the tax without a penalty.

Closeup deadline stop watchIf you request an extension (Form 4868) you must still estimate the income taxes you owe and must pay that estimated tax liability when you file the extension request.

Late-Filing Penalty: If you do not file your return by the April 15th tax deadline and do not request an extension, you face a late-filing penalty.  That penalty is usually 5% of the amount of the unpaid tax balance for each month your return is late.  The maximum penalty you may have to pay for filing late is 25% of your tax liability. 

If your return is more than 60 days late, the minimum penalty is $135 or the balance of the tax due on your return, whichever is smaller.  You might not owe the penalty if you have a reasonable explanation, which you must attach to your return when you do file.

Late Payment Penalty: Taxpayers should pay all the taxes they owe or as much as they can, when filing their return or requesting an extension.  Otherwise they face late payment penalties and interest charges. The IRS guidelines allow that any payment made with an extension request may help reduce or eliminate interest and late-payment penalties.

The interest rate on unpaid taxes is currently 3% per year, compounded daily. The late payment penalty is usually ½ of 1% of any tax (other than estimated tax) not paid by April 15th charged for each month or part of a month until all the tax owed is paid.  The maximum penalty is 25%.  The late payment penalty will not be charged if you can show reasonable cause for not paying on time.

Overseas and Military: Some taxpayers have more time to file without requesting an extension of time to file.  These include taxpayers who live and work abroad, as well as members of the military on duty outside the U.S.  Their tax payments are still due on April 15th, but they have until June 15th to file a completed return.

Members of the military and others serving in Afghanistan or other combat zones may wait to file their tax return up to 180 days after they leave the combat zone.

Victims of Natural Disasters: Individuals and businesses that reside or operate in areas that have been destroyed by natural disasters such as tornadoes, earthquakes or floods may also qualify for tax relief regarding both deadlines and taxes owed.  The affected area must be included in a federal disaster area declaration.

If you have any questions about whether you have time to file a completed return or should choose to request an extension, please contact us at McRuer CPAs and we’ll review your options and the cost of your choices with you.


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