The tax deadline of 17 May has arrived. But if you feel that you need more time to file your taxes, there is no need to worry, as you can simply apply for an extension. This will give you time until 15 October. This means that you will be able to review your return to make sure that you are taking advantage of all the tax benefits being made available to you.
Although this might seem enticing, there are a few important things to note. Filing an extension when you owe taxes only gives you more time to file, but not more time to pay. That means your payment is still due at the tax filing deadline of 17 May. Hence, if you fail to pay your estimated taxes by May 17, the IRS will charge you interest on the unpaid balance.
It is important to file your tax dues within the deadline or obtain an extension so that you are not hassled with late filing and/or a late payment fee. According to TurboTax, penalties that are issued when one fails to file can add up to 25% of the tax due. If you file for an extension but miss the extended deadline, you will be subject to this penalty.
In order to file an extension, submit the IRS Form 4868 electronically by the 17 May filing deadline. This can also be done for free using any of the Free File software that is offered by any major tax preparation company. These usually help you estimate the amount of your tax due so you can make the payment accurately. The other option is to print out the form and dispatch it to the IRS address of your state by the designated deadline.
Even if you file an extension, you still need to pay your dues by May 17. If you underestimate that amount, you could end up paying interest on the amount that you fail to pay. If you wish to file a state extension, it is important for you to note that the rules vary from state to state and each one has its own tax-filing extension rules. Therefore, you should check your state’s tax agency website for more specific and detailed information.
In the situation that you cannot pay your taxes, you might be able to qualify for either an installment agreement or an online payment plan that, according to the IRS, permits you to pay off your outstanding balance over a given period of time. If you already have such a payment plan, you can qualify to use the plan option to review the terms of your current agreement.