Once again, tax season is upon us. It’s never exactly a fun time, but things are more difficult now than they have arguably been in the last several decades. A lot of people have lost their jobs or have had their hours reduced and many have had trouble finding new jobs. This can make it difficult to file taxes because not everyone has the money to pay a tax preparer or even do their taxes online, as these services that are so often billed as ‘free” usually end up charging you a fairly hefty fee by the time it’s all said and done. What happens if you need an extension to file your taxes for one reason or another? In addition, what happens if you can’t afford to have your taxes done or you can’t afford to pay the amount you owe by the deadline?
What if You Need More Time to File?
If you need more time to file your taxes, you can fill out a Form 4868 and get an extension on your taxes that can give you an additional number of months to prepare the paperwork. Typically, you can usually get an extension that lasts through at least part of October of the same year, giving you approximately six additional months to file the paperwork for your taxes. Keep in mind, in order for this to be effective you have to file the Form 4868 on or before the original tax filing deadline. Otherwise, you’re subject to a 5% charge on the amount of taxes that you owe for filing late. Since you obviously don’t want to pay any more than you have to, this is something that should be avoided if at all possible. It’s worth noting that you can file this form either by filling it out on paper and mailing it or by filling it out online.
You will receive a confirmation once the IRS has received this form, so if you don’t hear back from them it’s important to follow up. It’s also worth noting that there is no charge to fill out the form, so if you’re worried about fees associated with filing the form itself in order to request the extension, there’s no need to be. However, you can still find yourself owing additional fees if you don’t pay the amount of taxes that you owe for the year on time. That’s right, simply filing the extension to increase the amount of time required to submit your paperwork does not mean that you automatically get an extension on the amount of time you need to pay your taxes. It might seem completely counterproductive, but the IRS still wants their money on time, even if it means that your paperwork won’t be there for another six months. If you haven’t filed yet, how exactly are you supposed to know whether or not you owe money and if so, how much? This is where things start to get a bit muddy, so it’s important to pay attention.
What Are You Getting an Extension for, Exactly?
It’s important to know that your extension is indeed for paperwork only, not for money owed. If you file the correct paperwork and you fill it out properly, you’ll automatically be granted an extension to file your taxes, so you don’t need to worry about that aspect of things. You would actually have to leave several sections of the paperwork blank in order for the IRS to refuse to grant that extension. That being said, they still want to be paid on time, as previously mentioned. If you think that you’re going to get a refund, then you probably don’t need to worry about paying anything up front. If at all possible, it’s a good idea to at least log on to one of the online programs that helps you do your taxes and walk through a rough cut so you can get an idea of whether or not you’ll be getting money back or if you’re going to owe money.
Doing so will also give you an idea of how much you will owe if you do indeed need to pay money back. That way, there are fewer unpleasant surprises later on. Again, if you think that you’re going to be getting a refund when you do finally file your paperwork, you may not need to worry about paying right now. However, if you believe that you’re going to owe money, it’s important that you estimate the amount to your best ability and then pay the IRS by the original deadline, not your extension deadline. Otherwise, you’re subject to a late payment penalty and additional interest that accrues during the six months that your extension covers.
What if You Can’t Pay?
Suppose that you’re requesting an extension for filing your taxes because you don’t have the money to pay someone to do your taxes, nor do you have the money to pay what you owe. If that’s the case, it’s important to know that there are places (such as many local libraries) where you can get tax filing help free of charge. If that option doesn’t work for you, then you can request an extension. Typically, you’re expected to pay the amount that you believe you will owe when you fill out the Form 4868 requesting the extension. If you don’t believe that you can make a payment at that time, then it’s important to get in touch with the IRS and set up a payment arrangement. They can delay your payments for a few months, provided that you can pay the entire amount you owe by that date. By the same token, they can also divide up your payments so that you’re paying what you would owe in several monthly installments. There’s an interest fee and a late payment penalty attached to it, but if you don’t have the amount of money required to pay your taxes in full, this is an option that makes it both more affordable and buys you just a little bit of time to sort things out.
As long as you file an extension by the original tax deadline, there shouldn’t be any reason that the IRS won’t accept it. If you believe that you’re not going to owe any money, then you’re probably good to go but keep in mind that if you do end up owing when you file, you will be penalized approximately 1% of the amount of money you owe for misjudging the amount. As a last note, it’s important to remember that if you live in a state that also charges state taxes, you need to get with the organization in order to find out how to handle that situation because it varies from one state to the next.