Even though the filing deadline is one of the most well-known (and feared) dates on the calendar, tax day can still creep up on people.
Don’t panic. The Revenue Agency will grant you an extension without too many problems. The hiccup there, though: You’ll still have to mail them a check today for any taxes you expect to owe.
It’s confusing, we know. Let’s see if we can make sense of it all for you.
How can I file for a tax extension?
Go to the IRS Free Files site. From there, you can electronically request an extension that automatically extends your filing date to October 16th.
If you use tax software from TurboTax, e-File, or H&R Block, you can also use them to file. Or, if you’re particularly old school, you can file by mail using Form 4868 or through your tax professional.
Do I have to pay taxes now? What is it about?
While the IRS will give you extra time to do the paperwork, it is less patient with the money you owe. You will need to estimate your tax debt, even if you haven’t calculated it, and pay everything you think you owe by today’s deadline.
There is a way to avoid sending money immediately. If you choose to use IRS Form 4868, you will also receive an automatic six-month extension. This form will also ask you to estimate your tax liability, but you won’t have to make a payment immediately. Here’s the hiccup: You’ll have to pay interest on your tax bill if you end up having debt.
What happens if I pay my taxes late?
Bottom line? You will have more.
There are two types of fees and penalties imposed by the IRS for late payers: one for late filing and another for late payment. If you file your return more than 60 days late, you will likely face a minimum penalty of $210 (unless you owe less, in which case the penalty is 100% of the unpaid tax). Otherwise, the fee can be up to 5% of the unpaid tax each month up to a maximum of 25%.
Late payment penalties generally amount to 0.5% of the unpaid tax per month, although they can be as high as 25%. If things get this bad, the IRS is usually willing to take a lower amount through a payment agreement.
I’m usually on time with payments, but I can’t afford what I owe at the moment. How much trouble am I in?
You may get some leniency if you have a long track record of filing/paying on time. The First Time Abatement program, which helps taxpayers avoid taxes, is available to qualified applicants. Your tax preparer or the IRS can help you file this request.