Can't file your tax return by the April 15 deadline? Taxpayers can request an automatic six-month extension of time to file the tax return. But, taxpayers beware, there is a catch. An extension is just an extension on the time to file the return -- it is not an extension on the time to pay.
Taxpayers are required to estimate the amount of tax that may be due with the tax return and remit payment with the extension to avoid failure-to-pay penalties. These penalties and interest could accrue from April 15 until the tax is paid, regardless of the extension. If a balance is still owed when the actual tax return is filed, at least the penalties and/or interest will have been minimized.
"If taxpayers are unable to file their tax return by April 15, there are several ways to request an automatic extension of time to file an individual return," says Twila Denton Midwood, EA, an enrolled agent with Advanced Tax Centre, Inc. of Rockledge, Florida and president of the Florida Society of Enrolled Agents.
"Most enrolled agents and other tax professionals can e-file the 'Application for Automatic Extension of Time to File US Individual Tax Return' for taxpayers. Or the application can be found on the IRS website (look for Form 4868), which can be printed and then mailed to the IRS. Whether taxpayers use a tax professional or print the application themselves, all or part of the estimate of the income tax due can be paid with a check or credit/debit card or by using the Electronic Federal Tax Payment System."
Information regarding remitting payment can be found on Form 4868. The fee charged will depend on the amount of the payment. Be sure to record the confirmation number provided upon payment.
If a taxpayer estimates that he will owe taxes and is unable to pay, it is important that they file their returns timely. Failure-to-file penalties may be assessed in addition to failure-to-pay. So, to minimize penalties, it is always best to file the return or an extension and remit as much as possible with either. Payment plans may be established later.
If you receive a notice from the IRS at any time during the year, contact your tax preparer immediately. If you did not hire one to prepare your tax return, you should then contact a licensed tax professional. Only enrolled agents (EAs), CPAs and attorneys have unlimited rights to represent you before the IRS. The term "enrolled agent" reflects that an EA can act as your agent before administrative levels of the IRS -- meaning he or she can talk to or meet with the IRS in your stead.
To find an enrolled agent in your area, visit the searchable "Find an EA" directory at www.naea.org.
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