Filed for an Extension? What You Should Do Now
So…you’ve submitted your extension request to the IRS, now what? Well, immediately after you file your extension, there are a few things to note. First, if you filed your extension electronically, you should expect to receive a receipt confirmation from the IRS within about 48 hours. However, if you mailed your extension to the IRS, you will not receive a confirmation.
An Extension to File is Not an Extension to Pay
The most important thing to keep in mind is that an extension DOES NOT mean that you have extra time to pay your taxes (if you owe). The IRS expects that you will send them the estimated taxes owed when you submit your extension. If you did not do this, you should submit those estimated taxes as soon as possible in order to minimize interest and penalties. If you underestimate your taxes, you will still be responsible for interest and penalties on the amount that you underpaid. If you overestimate, the IRS will return the difference directly to you.
Reasons to File an Extension
Some of the most common reasons to file an extension on your tax return are:
- Incomplete Documentation – If you did not receive a key tax document and have requested a new one but it has not arrived by the April 15th deadline, you are better off estimating your taxes and filing an extension.
- Unexpected Life Events – If there are issues out of your control that come into play during tax time, you may wish to file an extension. You may have been the victim of a natural disaster or recently lost a loved one. If you cannot focus on your taxes, the IRS does not ask why, so give yourself extra time.
- IRA Conversions – If you have converted your traditional IRA into a Roth IRA, you are required to pay taxes on the balance when you convert. However, if you “recharacterize” your Roth IRA back to a traditional IRA before you file your tax return, you can avoid making this payment. These conversions take time, so an extension may help by eliminating the requirement for you to pay this tax.
Be Ready to File on October 15th
Regardless of the reason for your extension, you can file electronically or by mail anytime before October 15th. If you fail to file by the extension deadline, prepare for severe penalties from the IRS. The IRS starts penalizing those who have failed to file by October 15th with a 5% penalty per month and a maximum 25% penalty. The easiest way to avoid the penalties, the headache, and the hassle is to file your return by the October deadline and estimate your taxes.
If you have questions about your taxes or would like advice on filing, extensions or specific issues about your return, we’re always here to help. Success Tax Relief has a proven track record of helping thousands of Americans all over the country with their taxes each year. We can help you file an extension and estimate any taxes owed so that you can relax and breathe easy knowing that your taxes are in good shape this year! Contact us today!