What to Do if You Need an IRS Extension
We all know that our federal income taxes are going to have to be paid by the 15th of April every year, but not all of us are able to get our taxes filed in time. If this is the case for you, then you definitely need seek an IRS extension so that you do not incur major penalties for yourself that are going to be very expensive. First, though, you really need to understand that when you file for an extension on your tax return you are in no way buying extra time to pay your taxes.
You must pay what you owe by April 15th no matter what or you will incur a separate set of penalties on the amount of tax you owe and this is not a good situation to be in at all. The extension provided with Form 4868, known as Application for Automatic Extension of Time to File U.S. Income Tax Return, must be filed prior to the April deadline and it is offered in both English and Spanish. Once completed and accepted by the IRS, it will allow an extra six months to get your tax return filled out and sent in. After that six month extension, you must have the return filed or penalties will begin to rack up quite quickly.
If you know that you owe taxes this year then what you will need to do is include a check with your extension request in order to make sure that you do not owe any penalties. The IRS extension is a very handy tool for those in a bind, but you need to use it correctly or it will not do any good. By not paying your taxes, or at least as much of the balance that you owe as you possibly can, you will begin to accumulate interest due and this comes at a rate of 5% per month for each month after April, up to a maximum penalty of 25% of the total amount that you owe. This is substantial and will wreak havoc on your finances so it is best to avoid it at all costs. You can arrange other methods of payment with the IRS through their website if you need to so be sure not to wait until the last minute.
The extension you file will be good until October 15th of the same year in which you filed it and the form itself is very simple to fill out. You may need to estimate what you owe if you are not sure and there are a variety of tools that can help you do this, but your best bet in a situation like this is finding the trusted services of a tax preparation specialist to help you avoid hot water with the IRS.