Most of us have been there. It’s April 14. Yes, you’ve had months to prepare but life gets in the way and you know that filing your taxes by the deadline just may not happen.
It might be time to consider filing an extension.
But what exactly does that mean and when should you consider filing one?
It’s a quick process but you still have to file a form. Sometimes we just can’t avoid having big life events fall around fixed government deadlines like Tax Day. Whether you’re going to be out of town, you’re dealing with a new addition to the family, or mourning a loss, filing your taxes can easily fall to the bottom of the priority list. The great thing about a tax extension is that you receive an extra six months to file once you submit Form 4868. But you must submit the form; otherwise, you could be penalized for failure-to-file in an amount up to 25% of your owed taxes.
Sometimes the documentation you need to file comes after the deadline. We can’t file our taxes without all the documentation needed, especially when it comes to getting timely W-2s, 1099s, or K-1s. Oftentimes there can be a delay in receiving these forms – especially those who are in partnerships – so it’s helpful to be able to file an extension until you get all that your tax forms need to file properly.
An extension to file doesn’t mean an extension to pay! We hate to break it to you, but if you were planning to file an extension because you can’t pay your taxes, you’re out of luck. An extension to file doesn’t mean you get extra time to pay. If you don’t pay when you file your extension, you’ll be liable for penalties AND interest.
In other words, if you owe taxes, you’re going to be penalized and pay additional interest on the amount your owe.
THE BOTTOM LINE:
Filing a tax extension can help alleviate a lot of stress around April 15, but it’s important to know about filing the proper form, reasons for filing it, and that you still have to pay any taxes due even if you file an extension.