Persuading the IRS to give you more time to file your tax return is fairly easy — you just have to file Form 4868 by the April deadline and you’ll get an extension until October. But the work doesn’t end there.
Here are a few other things you’ll need to do if you’re filing your tax return after the April deadline.
Set aside cash for interest
When you file for an extension, you have to make a good estimate of what you owe the IRS and send some or all of that amount along with your extension request in April. If the estimated payment you send in April ends up being less than what you actually owe, you’ll need to pay interest on the difference.
“The interest runs until you pay the tax. Even if you had a good reason for not paying on time, you will still owe interest,” says the IRS on its extension form.
Prepare to pay a tax penalty, too
The IRS’s late-payment penalty normally is 0.5% per month of the outstanding tax not paid by the April deadline. The maximum penalty is 25%, according to the IRS.
You can catch a break if you’ve paid at least 90% of your actual tax liability by the April deadline. The IRS also might let you off the hook if you can show “reasonable cause” for why you didn’t pay on time — though you’ll need to attach a written statement to your return.
Circle Oct. 17 on your calendar
If you got an extension in 2016, Oct. 17 is the last day you can file your return and pay your outstanding balance. Don’t miss your deadline! Otherwise, the IRS can sock you with a late-filing penalty of 5% of the amount due for every month or partial month your return is late. That means an extra $1,000 you owe could rack up $50 in penalties for every month after October that it’s outstanding. The maximum penalty is 25% of the amount due. In our example, that can mean shelling out an extra $250.
If your return is more than 60 days late, you’ll pay either $135 (adjusted for inflation) or what you still owe, whichever figure is smaller. And remember, that’s on top of what you still owe in taxes.
The good news is that the IRS may throw you a lifeline: You might not have to pay the penalty if you have “a reasonable explanation” for filing late, so again, you’ll need to attach a written explanation to your return.
Relax if you’re abroad or in the military
For virtually anyone who files late, forgetting to request an extension by the April deadline is a huge no-no. But if you’re a U.S. citizen or resident who lived and worked outside of the country on the April deadline, you automatically get two extra months to file your return and pay any amount due without having to request an extension. People affected by certain natural disasters can automatically get more time as well (check the list of qualifying disasters here). Victims of tornadoes and flooding that took place in parts of Texas beginning March 7, 2016, for example, got an automatic extension to July 15.
Members of the military also get more time, depending on where they are and what they’re doing (see the rules here). Soldiers on duty outside the United States and Puerto Rico get an automatic two-month extension, for instance. Soldiers serving in combat zones, on the other hand, automatically get 180 days after they leave the combat zone to file their returns. If they’re injured in a combat zone, they have 180 days after they leave the hospital.
Hold your head high
Procrastination isn’t the only reason people get extensions. For example, many investors don’t get their K-1s, which are statements of income from partnerships, until after April.
So, assuming you remembered to request an extension by the April deadline, filing your taxes after April isn’t a curse, nor does it put some sort of black mark on your “record.”
In fact, it’s rather common — for the 2016 tax filing season, the IRS expected receive 13.5 million extension requests.
Tina Orem is a staff writer at NerdWallet, a personal finance website. Email: torem@nerdwallet.com.
from NerdWallet
https://www.nerdwallet.com/blog/taxes/youre-filing-tax-return-late/
No comments:
Post a Comment