Everything You Need to Know About Filing an Extension
The IRS makes it fairly easy for taxpayers to take a little extra time to file their tax return. April 15th is traditionally regarded as tax day each year, but if you find yourself behind and unable to complete and submit by this deadline, an extension may be right for you.
The IRS allows taxpayers to file a six month extension for virtually any reason as long as the paperwork is submitted to them on time and completely. The IRS grants these extensions automatically, so you do not have to worry that your extension request will be denied. You will need to file a Form 4868 electronically (or on paper) by the annual filing deadline.
There are many benefits to filing an extension:
● Reduces the stress of trying to meet the April 15th deadline
● Gives you time to thoroughly review your return and reduces the risk of mistakes and common errors
● Avoid stiff penalties associated with not filing your taxes
● Take advantage of any changes to the tax laws
● Gives you opportunity to collect any missing tax information
An important caveat regarding extensions
There are many great reasons to file an extension, but do not be fooled. If you are concerned that you cannot pay your tax debt and think that an extension will give you more time to pay, unfortunately, you are mistaken. An extension gives taxpayers more time to file their taxes, but if they owe the IRS, you are not given more time to pay. If you believe that you will owe taxes and you file an extension, your best bet to avoid penalties is to send in your anticipated payment to the IRS with your extension.
Options if you are unable to pay your tax bill
If you are not able to pay the amount due to the IRS, an extension is not the right course of action, but you do have options.
1. Request an extension to pay: You can often request an extension of 60 or 120 days to pay. While you will still be subject to penalties and interest, the rates are considerably lower than if you simply do not pay.
2. Installment Agreement: Installment agreements are designed to allow taxpayers to pay their tax bill over time, rather than in one large lump sum. It works very much like a credit card – you pay the IRS a set amount of money each month.
3. Offer in Compromise: If you determine that you cannot afford your tax bill, you can apply for an offer in compromise, which requests that the IRS review your financial situation and determine an amount that you can afford to pay. These are fairly difficult to get approved, so you may want to consult a tax professional for help with this process.
4. Consider a loan or low interest credit card to pay: Interest rates for a loan or a low interest credit card are often lower than the cost of interest and penalties from the IRS if you do not pay your taxes.
Find Success with your taxes
If you have questions about whether filing an extension is the best course of action for you, consider seeking the help of a reputable tax firm. Success Tax Relief specializes in helping people find the best possible path for solving all types of tax problems. We can review your tax situation and help determine whether an extension, installment agreement or an offer in compromise will work for you. Contact us today to discover a solution and get some relief!