Tax Day is almost here: time is running out towards the April 15 deadline for filing your federal application. But if you need more time, don’t worry.
First of all, you are not alone. Dozens of taxpayers request more time to file each year: More than 19 million people have requested an extension for their 2022 tax returns, according to IRS data.
This year, if you receive an extension, the application deadline will be pushed back to October 15th. But there’s an important caveat: Getting an extra six months to file your tax return doesn’t grant you an extension to pay your taxes. If you owe money to the IRS and don’t pay the full amount by April 15 (in most states), penalties and interest will begin accruing on April 16.
If you can’t pay the amount you owe right away, the worst thing you can do is ignore it, Wendy Barlin, a certified public accountant and owner of About Profit, told Money in 2021.
“You don’t want to ignore the IRS,” he adds.
Fortunately, you have options. Here’s what you need to know to give yourself more time to file or pay your taxes.
How to request an extension in 2024
If you need more time to file your taxes, be sure to request it. You can fill out Form 4868 through your accountant, tax software like TurboTax, or through the IRS website. You can also request an extension when you make a payment to the IRS.
Don’t avoid filing because you know you have debts that you can’t afford to pay. You should still file a return or request an extension by April 15 so you don’t face what the IRS calls a failure to file penalty, which is 5% of your unpaid taxes for each month or part of a month that a refund is late, up to 25% of the unpaid taxes. (You may also face a penalty for non-payment.)
Meeting the April 15 deadline may be tight, but if you have the documents you need and can file honestly now, Barlin recommends doing so.
“There is no value in extending if nothing will change for you between now and October, when the final deadline comes,” he adds.
The IRS offers several options to help you file and prepare your taxes online for free, including the new IRS Direct File being piloted in 12 states this year. The IRS also significantly expanded its free file eligibility this year, so if you didn’t qualify last year, make sure that hasn’t changed this year. Regardless of income level, everyone can use IRS Free File to request a free tax extension.
Also keep in mind that the deadline for filing state taxes may be different than the deadline for filing federal taxes. Be sure to check out Money’s breakdown of state filing deadlines.
How to have more time to pay your taxes
Again, requesting an extension does not mean you have until October to pay any taxes owed. But if you can’t pay your entire tax bill by April 15, you have options.
You can set up a payment plan online with the IRS to pay off your outstanding balance over time with penalties and interest. Depending on your eligibility, you can set up a short-term payment plan where you pay off your balance in 180 days or less, or a long-term payment plan where you pay monthly.
While a short-term payment plan has no setup fee, a long-term payment plan has a $31 online setup fee if you pay via automatic withdrawals and a $130 setup fee if payments are not automated ( both of these fees are higher if you set up your account by phone, mail, or in person). Low-income taxpayers can get the tax reduced, refunded or waived.
Cari Weston, a certified public accountant, told Money in 2021 that she recommends automating payments because — not only do you not face the additional fee — but you also don’t want to risk missing a payment. She says her clients have forgotten to make payments or lost checks in the mail, and the IRS has forced them into collection efforts, which can include seizing wages or property.
“You don’t want to promise something to the IRS and then not deliver on it,” Weston adds.
So he advises not to overcharge yourself when setting up your payment plan. If you think it will take you four years to pay off, give yourself five. If you pay rent on the first day of each month and have a lean wallet until mid-month, make your monthly payment on the 20th. If you think you can pay $200 a month, commit to $100 for automatic withdrawals—you can always make extra payments, he says.
If you don’t know how much you can commit or are facing undue hardship, you can also call the IRS and ask them to hold the collection on your account. Usually the agency will give you at least four to six weeks, Weston says. Be sure to document the number you call, the date and time of the call, and the representative’s ID number.
What if you pay the IRS too much? Don’t worry. The agency will return the money you owe as a refund, which generally takes about three weeks, according to H&R Block.
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2024 Tax Changes: What’s New for Filing Taxes with the IRS This Year?
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The IRS Free File is open for the 2024 tax season, with a major expansion of eligibility