What happens on April 15? For those of you from non-US countries, that probably doesn’t mean much. To us Americans, April 15th is Tax Day, the deadline to file tax returns. Yup, and entire day taken over and corrupted by government. Well, I guess those interstates won’t pave themselves for free.
If you’re working at the last minute then you might be looking for last minute tax tips. Of course, what many people really want to know is what happens if you don’t file your taxes by the deadline and is there anything I can do if I can’t get my taxes done?
The answer, actually, is surprisingly benign. Filing late is a no-no and can result in all kinds of problems, not the least of which are penalties. But, there is a ray of hope. Instead of filing your tax return, file for an extension. One extension is granted automatcially, so all you have to do is send in the form. If you can’t get your taxes done by April 15, then make sure you file your request for extension in its place to avoid penalties, fees, and interest.
If you file for an extension when are your taxes due? October 15th, a full six months later. Whew, big relief eh? You’ll need IRS Form 4688 Filing for an Extension. It has instructions for using the paper form, or other electronic methods.
But, there is a catch to filing for an extension. Your TAX RETURNS are given an extension to September, your TAX PAYMENT is not. In other words, if you end up owing money, you still have to pay it by April 15th even if you get an extension.
How are you supposed to know how much to pay if you haven’t done the tax return yet?
Actually, estimate, is the correct answer, and make sure you are on the “over” side, not the “under” side. Paying too much gets you a refund later. Paying too little means you have to pay interest on the amount of underpayment from April 15th.
For example, if you’ve partially completed your taxes and it looks like you would owe about $2,000 but you haven’t gotten all of your income entered in yet, then send Uncle Sam a check for $3,000, or whatever you are pretty sure will end up being too much. You’ll get the extra back as a refund when you do finally file your income taxes, which is an incentive to do them before September.
On the other hand, if it looks like maybe you’ll owe $2,000 and you are positive all of your income is accounted for, it’s just that you aren’t sure about some deductions, then send the IRS the two-grand and see if those deductions work out. If not, no harm, no foul. If so, you’ll get a rebate too.
But, if you mail the IRS a check for $2,000 and then you end up owing $3,000, then you not only owe $1,000, but you owe interest, and maybe penalties on $1,000 as well. While the interest rate is fairly high, it isn’t usurious, and it’s only for five months, so, on small amounts, the interest won’t add up to much, but being way off could be disastrous.
If you still plan to beat the midnight deadline on April 15th, make sure you know which, if any, post offices in your area will be staying open late to collect tax returns. With budget cutbacks, you can expect the post office to be a little less grand in how many collection locations it leaves open late.
With a free extension available there is really no reason to not file your income taxes. Avoid the penalties for not filing your taxes and get an extra five months, free and easy.