Guest Author - Kate Woods
Last Minute Len is in a panic because he didnít gather up all his data to get his taxes done by the April 15th due date. Now this is nothing new for Len but yet every year he panics the last week before the due date asking what he needs to do to get an extension.
Fortunately for Last Minute Len getting a federal tax extension isnít terribly difficult. However, Len would still need to gather up enough of his tax documents to estimate approximately what his taxable income will be as well as what his approximate tax liability and balance due would be. Even though a tax extension is granted in most cases by filing Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, on or before April 15th, the only way to avoid all penalties is to also pay any balance due on or before April 15th. The extension technically only extends the time to file the actual return it does not extend the time to pay any balance due. If you do not pay the full balance, you may be assessed interest and penalties. The extension is good for six months, until October 15th.
If thatís the case then why do people bother to extend their return? Sometimes people know the approximate amounts but need to verify them and canít find their documents or havenít received them. Sometimes, people believe they have additional deductions that will lower their balance due but donít want to risk filing an inaccurate return if it turns out that they do not have additional deductions.
If you are like Last Minute Len and you simply cannot complete your federal personal tax returns by April 15th, file an extension and pay the balance due if you are able to. If you cannot pay the balance due you should still file the extension as the extension will still be valid but you will incur some additional costs due to late payment of the tax but you will avoid failure to file penalties or late filing penalties.
Form 4868 can be downloaded on the IRS website at www.irs.gov. You can also take your information to your tax preparer and have an extension prepared. If your preparer is authorized to e-file they can e-file your return and advise you regarding your payment options.
For your extension to be valid, be sure that you have your extension post marked or e-filed on or before the due date of April 15th.
Any U.S. tax advice contained in this electronic communication was not intended or written to be used, nor can be used, by any recipient of this communication for the purpose of avoiding penalties that might be imposed pursuant to the Internal Revenue Code or U.S. Treasury Regulations, or any other state or local law or regulation.
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