If you are like the rest of the millions of individuals the IRS expects will put their tax return on extension, don’t be alarmed! Here are a few tips if you have yet to file your tax return!
Ask for an extension
If you simply don’t have the time or the effort to get your return out before midnight, consider filing an extension. The IRS offers a service via their website, Free File, which allows anyone to file for an extension or you can manually prepare your Form 4868. Both options will provide you with an additional six months to file, extending your tax return’s due date to October 15th instead. Keep in mind, filing an extension will help you avoid the failure to file penalty, which could be assessed at 5% monthly of unpaid taxes. In addition, this penalty can be assessed up to a whopping 25%!
Yes, the IRS still wants their money!
While filing an extension will give you time to file, it does not however, give you additional time to pay. If you file for an extension, you are required to pay 90% of the actual tax due. Failure to pay will expose you to the failure to pay penalty, which is approximately ½ of 1% monthly up to a 25% maximum penalty. If you can’t afford to pay the entire amount, at the very least, submit a partial payment in order to reduce penalties. In addition, consider using another payment option like an installment agreement, which would allow you to make monthly payments on the amount you expect to owe.
File past tax returns
Not only is your 2014 tax return due, but keep in mind, April 15th is the last day to claim a tax refund for the tax year 2011. The IRS allows individuals to claim a refund by filing an original tax return within 3 years of the tax deadline. Otherwise, you risk the chances of obtaining your tax refund.
Keep in mind, the IRS does not access a failure to file penalty for returns due a refund.
Remember: your choice, your future!
Kemberley Washington is a certified public accountant and professor at Dillard University. Subscribe to her blog at kemberley.com or connect with her on Twitter @kemwashcpa.