What you need to know about filing a tax extension

Posted on April 11 2014

The April 15 deadline for filing taxes is probably glued in your mind, given its prevalence in popular culture. However, what you may not realize is that the deadline is actually quite flexible because anybody can apply for and receive a tax extension for any reason. 

You don't need to have a family emergency or explain your situation, but rather, all you have to do is submit one simple form to the IRS and you'll have six more months to complete your tax return with OnePriceTaxes. 

Take a few minutes now to learn everything you need to know about filing a tax extension and then submit the form so you can breathe easily without the April 15th deadline hanging over your head.

What is a Tax Extension?
A tax extension is simply a form you file with the IRS that allows you to file your tax return after the April 15th deadline without having to pay a late filing penalty. The late filing penalty is usually 5% of the amount you owe for each month you are late. The maximum late filing penalty is 25% of your taxes owed. If you owe $2,000 in taxes, you could owe $500 more if you file five months late! A tax extension allows you to file up to six months late without a late filing penalty, moving your tax return deadline to October 15th. time to sort your taxes out before the April 15th deadline. Either way, an extension will help you out!

Need more time to be thorough: Although you can always file an amended tax return later to get any deductions or tax credits you forgot about the first time around, it's best to just get it right on your first try. Plus, amended returns are typically subject to more scrutiny than the initial return. Therefore, if you are feeling like you may have forgotten about tax deductions or credits and just want more time to check things over, don't hesitate to file a tax extension.

What do You Need to do to File a Tax Extension?
IRS Form 4868 is the one you need to submit for a tax extension, and you need to mail or submit it electronically on or before April 15th. When you fill out the form, you will need to list your basic information, including your name, social security number, and mailing address. Then you will need to estimate your total tax liability and total payments thus far so you can estimate how much you will owe when you file.

Do You Need to Pay Anything When You File an Extension?
While you are not required to make a payment when you get an extension, it is highly recommended if you estimate that you will have a balance due. Although the tax extension waives the late filing penalty, you can still owe a late payment penalty on any tax you have not paid by April 15th. This penalty is 0.5% of your tax due per month. However, if you paid at least 90% of your total tax liability by April 15th, you will not owe a late payment penalty at all.

Do You Need a State Tax Extension Too?
You probably won't complete your state tax return if you haven't done your federal one yet, so you need to make sure your state won't assess a late filing penalty on you for missing the April 15th deadline. Rules vary from one state to another, so check with your state's department of revenue to find out if you need to file a form to get an extension or if the federal form grants an automatic state extension. Then when you are ready, you can submit your federal and state tax returns through OnePriceTaxes for just $29.95.

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