If you need more time to get your taxes done right, then file a
\nForm 4868, Application for Automatic Extension for Time to File U.S. Individual
\nIncome Tax Returns. If you don’t file a tax return or at least an extension by
\nthe April 17 deadline, then you’ll owe IRS penalties and interest.<\/p>\n
The penalty for not filing your tax return or an extension on time is a stiff 5
\npercent per month up to a maximum of 25 percent of the amount of tax due on the
\nlate-filed return.<\/p>\n
Filing an extension gives you an automatic extension to file your final 2011
\ntax return until Oct. 17, 2012. But filing an extension does NOT give you an
\nextension to pay the taxes you owe. You’ll need to also make a reasonable
\nestimate of taxes you owe and submit a payment with the Form 4868. To avoid a
\nlate payment penalty, you have to have paid (from withholding, estimated tax
\npayments and what you pay with the extension) at least 90 percent of what you
\nowe, or have paid 100 percent of your 2010 tax liability. If you want to avoid
\npaying any additional interest for paying late, you have to pay the full amount
\nof the tax liability owed. The current IRS interest rate for late payments is
\n4%, so it’s not that big a deal.<\/p>\n
It’s a good idea to file an extension if you need more time to do a thorough
\njob preparing a tax return. Especially if in 2011 you had to deal with a lot of
\nnew tax issues. Here are a few reasons why filing an extension is a good idea:<\/p>\n
– With so many new tax credits available, you’ll want more time to do your
\nresearch and make sure you are taking advantage of every credit you qualify
\nfor.<\/p>\n
– If you had income from special situations – sale of property, exercise of
\nstock options or cancellation of debt income, etc. – and you need more time to
\ngather your records and get advice as to how to report.<\/p>\n
– If your tax preparer is really bogged down, ask him to file an extension now.
\nThis will give him more time to finish your return later when he can give it
\nhis full attention and do a more thorough job.<\/p>\n
– Many financial institutions are still sending corrected forms 1099 with
\nrevised amounts for qualified dividends and foreign taxes. Taxpayers with
\ninvestment income may want to file an extension if they typically receive a
\ncorrected form 1099.<\/p>\n
Filing an extension is free. For your federal income tax return, you can log
\nonto the IRS Free File site and use the service on that site. Also, most states
\nwill have this feature available on their web sites.<\/p>\n
And if you do file your federal tax returns on extension, then you’ll also need
\nto file an extension for your state tax return as well. And don’t worry –
\nfiling for an extension does not make your return any more likely to be
\nselected for an IRS audit<\/p>\n
By <\/cite>Ray Martin<\/em> | <\/cite>CBS MoneyWatch<\/em> <\/cite><\/p>\n","protected":false},"excerpt":{"rendered":" If you need more time to get your taxes done right, then file a Form 4868, Application for Automatic Extension for Time to File U.S. Individual Income Tax Returns. If […]<\/p>\n","protected":false},"author":88890,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4,3],"tags":[],"class_list":["post-107","post","type-post","status-publish","format-standard","hentry","category-business","category-tax-tips"],"yoast_head":"\n