Life happens–and when it does, it has no regard for the federally mandated anti-holiday known as “Tax Day,” which this year falls on Tuesday, April 17th. So, what if you can’t pay your taxes on time?
As is often the case, the U.S. government’s process for filing a tax extension isn’t as cut and dry as it could be.
Below is a quick guide to filing a tax extension, the benefits and drawbacks of doing so, and a glimpse into not only of how our trained tax professionals can prepare and file your taxes if your situation has outgrown your personal tax-law expertise, but also how we can help put you on track to resolving any back taxes you’ve yet to file from years past.
Does an Extension Mean I Don’t Have to Pay Yet?
No. The IRS grants six-month extensions on the “filing” part of taxes, not the paying part. How are you supposed to know how much to pay if you’re not yet ready to file? Good question. The short answer is, You have to estimate–and you have to pay on time! If you happen to underestimate your tax bill, an extension won’t exempt you from late penalties, which range from 5% per month to a 25% of your tax bill.
Does the IRS Ask Why I Need an Extension?
No. The reason why you can’t file on time is your business, and neither we at Civic Tax Relief nor the U.S. government will ask for an explanation. (The reason for this isn’t immediately clear, but it could just be that the government doesn’t want to have to adjudicate people’s personal lives. It could also be that the government cares less about paperwork than getting paid, and since tax extensions don’t exempt you from paying estimated taxes owed by April 17th, there’s no financial loss to Uncle Sam.)
How Much Does a Tax Extension Cost?
Filing a tax extension is “free” in the sense that there is no penalty or fee associated with it.
What’s the Benefit of an Extension?
In a word, savings. More time allows more scrutiny, which means greater detail in calculating deductions, adjusting certain accounts (such as IRA funds), even figuring out accurate equipment depreciation values if you own a business. In general, more time means you aren’t rushed, and that means fewer mistakes, especially for those who do their own taxes.
What’s the Drawback of an Extension?
If you estimate your tax bill correctly up front and you meet the extended deadline, there’s not much risk in filing an extension. If you don’t, it could cost you. As we’ve noted, an extension applies to filing a return, not paying taxes due. If you owe more than you had originally estimated, the IRS will charge you for the mistake. If the IRS owes you, you’ll likely wait longer if you’ve filed a return.
What if I Owe Back Taxes?
Contact us! We can help you navigate the options (including IRS relief programs) to get the most savings out of a payback plan you can afford.
Need More Time on Taxes? We Can Help!
Paying taxes is no vacation, but it doesn’t have to be a nightmare either. Whether your tax situation is too complicated to handle on your own, you just don’t have the time, or you need some guidance on how to tackle back taxes, we’re here to help. Give us a call at 800-790-1507 and let us take the burden off your shoulders.