You can’t avoid the IRS.
Maybe you procrastinated, can’t find paperwork, or lost track of time. Regardless, the IRS does not care why you haven’t filed. But, they do need to know you intend to.
So, if you think you won’t make the deadline, you’ll first need to file an extension. We’ve outlined everything you need to know about tax extensions below.
Interest Is Charged
An extension doesn’t mean you can forgo a payment. It just means you have more time to get the paperwork together.
To avoid interest on any money you owe, you’ll need to estimate your tax liability for the year. Paying less than 90% of what you owe means you’ll end up with a penalty of 0.5% on the amount every month (until the remaining balance is paid off).
It’s also important to note that the IRS can deem your estimated amount of tax ‘unreasonable’. If they do this, they may disallow an extension and charge you a late-filing penalty.
It’s Best to E-File
The best way to file for an extension is online. Filing online makes it easy and quick to get all your paperwork together. Plus, the electronic filling is simple to save, store and document for years to come.
To file for an extension, we recommend submitting IRS Form 4868 online. Doing it electronically means you’ll be able to save time and will get your refund back faster.
It’s also a good idea to set some electronic reminders in a calendar, app, or note that can notify you when the deadlines are approaching. These simple tricks will prevent missed deadlines from causing issues in the future.
State Rules Vary
Rules vary from State to State. Everyone has unique tax filing laws, regulations, and requirements when it comes to extensions. Although all the regulations are outlined for the states online, consider speaking with a financial or tax professional in your area to verify you have all your documents in order.
Extensions for Businesses
Just like for individuals, businesses can file for an extension. Similarly, businesses can file for one, regardless of the reason, so long as it’s before the deadline.
Businesses will also be charged interest on any amount that’s owed (regardless if they’ve requested an extension). The fees and forms that are required are dependent on the type of entity that’s filing.
For more information on your business, and the penalties for requesting an extension, it’s best to speak with a professional. Financial experts like us at A.P Accounting & Tax Services will carefully review the Federal, State, and local laws alongside your company. Resulting in a speedy return without confusion.
Payment Options
Along with electronic filings, the IRS accepts electronic payments. This makes it easy to submit estimated liability payments and keep track of interest fees.
Payments can be made online using credit and debit cards or with other governments payment options (such as Direct Pay)
As well, if you’re unable to make an immediate payment, you can apply for a payment plan. This enables you to make monthly installments towards the remaining balance.
Depending on your situation, you might also qualify for an offer in compromise (an option to settle tax debt for less than the full amount) or a delay in collection. However, these situations are rare and are best discussed with a professional.
So, if you’re struggling to maintain paperwork, calculate estimate tax, and remember deadlines, it’s time to get help. Our dedicated staff is able to review your books to ensure an extension is right for you.
Whether you’d be interested in learning more, or knowing what services would benefit you, give us a call at 407-328-5001.
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