Filed for a Tax Extension? What You Should Do Now
If you are one of the millions of Americans that filed a tax extension this year, you probably feel some relief knowing that you have some additional time to file your tax return. Rather than sitting back and watching those six months pass by, you should be asking what you need to do now to get ready to file. Here are some easy tips that will help you come October — your new deadline:
Remember What an Extension Really Is
A tax extension is an extension to file your taxes — not an extension to pay your taxes, if you owe. This means that if you owe the IRS, they expect you to pay an estimated amount on April 15th, along with your extension request. If you have not done this, you should do this as soon as possible to avoid additional penalties and interest.
October 15th is your new deadline to file, so use this time to gather all of the documentation and information that you will need to file so that your back is not against the wall come mid-October. Many people file an extension because their tax paperwork has not been received by April, so between April and October you should make sure that you request and receive this necessary paperwork.
Be Ready to File No Later than October 15th
The IRS penalties are severe if you do not file your return by the extension deadline. If you owe money and do not file by October 15th, the IRS begins charging you 5% per month with a maximum penalty of 25%. This can really add up fast.
Come Up with a Plan if You Cannot Pay
If you are unable to pay your tax debt to the IRS, spend this time coming up with a plan for how you will make the payment. Ignoring the debt or simply deciding not to pay will only result in you owing more money. The IRS offers several viable options that you can consider:
- Installment Agreement: This is a payment plan that allows you to pay your debt off in monthly installments rather than in one large lump sum. This spreads the payments over a longer period of time, which is often easier to plan for. Interest and penalties are included in the monthly payments.
- Offer in Compromise: If you are suffering financial hardship, then there is a chance that you could settle your debt for less than you owe. You must be able to prove that you are unable to pay the debt with proper documentation.
Success Tax Relief: Tax Planning Starting Now
If you have filed an extension and are not sure how best to prepare to file your return in October, or just have questions about your return, deductions, audit risk or potential payment options, you can always get answers from the team at Success Tax Relief.
We have been helping taxpayers navigate the complexities of the tax process for more than 60 years. We will work to understand your unique needs and your financial situation and make recommendations on tax strategies that will work for you. Call us today at 1-877-825-1179 or contact us here for a free consultation.