Tax tips for the April 15 filing deadline
Tax Day is just around the corner and FOX 13’s Craig Patrick shares the latest information ahead of the April 15 deadline.
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The April 15 tax deadline is just a few days away. If you feel like you have a little more time, go for it.
Instead of filing your return by April 15th, you can also file a shorter form of less than one page for an automatic no-questions-asked extension until October 15th. Basically, you’ll need your name, address, social security number, and any taxes owed or due. Importantly, the IRS reminds taxpayers that an extension to file a return is not an extension to pay taxes.
If you owe taxes, you must send a payment to cover it. Failure to do so will result in a penalty being imposed on the unpaid amount.
Only applications will be extended. “Taxes are still being paid by April 15,” said Carl Breedlove, principal tax research analyst at H&R Block.
How do I know when to request an extension?
If you find that information is missing, you won’t be able to get it right away.
“If information is missing, you should definitely apply for an extension to give us more time to gather that information,” said Ishai Kabaker, a partner at Garthy Schneider LLP. “Third-party K-1s are one of the most common sources of missing information.”
How do I apply for an extension?
The IRS provides the following guidance:
If there are no unpaid taxes: Individuals, regardless of income, can request an automatic six-month tax return extension using IRS Free File at IRS.gov/freefile.
Alternatively, taxpayers may file Form 4868, Application for Automatic Extension of Filing Deadline. If the form is mailed, taxpayers must do so by April 15th. Due to changes in the U.S. postal system, it may take several days for your mail to be postmarked, which may be considered a delay by the IRS. If you don’t have time, go to your local post office and have it hand-postmarked, or consider filing online.
if you borrow money: Taxpayers can submit electronic payments and select Form 4868 or Extension as the payment type. Taxpayers do not need to file Form 4868, as the IRS automatically counts it as an extension.
Please note that filing may take longer for disaster victims, some overseas residents, and military personnel in combat zones.
What happens if I don’t apply for an extension?
If you don’t file for an extension, penalties will start accruing immediately after your tax payment deadline. Here we will explain in detail what the costs will be.
The IRS charges a non-filing penalty if you don’t file your tax return on time. The penalty is 5% of the tax owed each month, or up to 25% for part of the month for late filing. If your return is more than 60 days late, you will also be subject to a minimum late filing penalty. The minimum penalty is the lesser of $525 or 100% of the unpaid tax for the current year.
Additionally, if you are unable to pay the outstanding amount in full, your costs will increase further. The IRS collects 0.5% of unpaid taxes each month or part of a month up to 25% from the filing deadline until taxes are paid in full. If taxes remain unpaid 10 days after the IRS issues a Notice of Intent to Seize Assets, the penalty increases to 1%.
If that wasn’t bad enough, the IRS also charges interest on the unpaid balance. Interest rates are determined quarterly by the federal short-term interest rate plus 3%, compounded daily. In the first three months of this year, the rate was 7%.
If you don’t owe money or owe a refund, there’s no penalty for filing late, but the IRS recommends filing as soon as possible. If you owe a refund, you will not receive a refund until you apply.
How do you estimate your tax liability?
“Start by multiplying your additional income by your marginal tax rate,” Kabaker says. “When in doubt, it’s a good idea to add a cushion to your payment in case anything goes wrong.”
What happens if I can’t pay the full amount owed?
If you can’t afford to pay your taxes in full by April 15, apply for a payment plan. Once you apply, the IRS will notify you immediately if it has been approved.
The IRS lists a variety of payment plan options that you can choose from.
Don’t forget your state tax deadline
State taxes are often paid at the same time as federal taxes. So, when you file for a federal tax extension, check your state tax deadlines.
“Some states have their own extension forms and requirements, and some states will offer automatic extensions or rely on federal extensions,” Kabaker said. “Know your state’s rules to determine whether you need to file an extension separately in your state.”
Medora Lee is USA TODAY’s money, markets and personal finance reporter. Please contact us at mjlee@usatoday.com. Subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
