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Running out of time to file your tax return? Need a few more weeks to sort out your statements and documents? Don’t stress out! Just file a tax extension before the due date and save on late filing penalties and interests. Tax extension will also give you 5-6 months’ time to file your returns on federal taxes.
Federal Taxes and Tax Extension
Federal Taxes are taxes levied by the Internal Revenue Service (IRS) of the United States on the annual income earned by individuals, business entities, or other taxable entities. Payment of federal taxes and filing of returns is due on April 15 for individuals and on March 15 for most businesses.
However, if you require more time to file your returns, you can apply for a tax extension on or before the deadline. On submitting a tax extension request, you will be granted an additional 5-6 months’ time for filing your returns.
Please remember that a tax extension only gives you more time to file your returns; not more time to pay your taxes. To avoid penalty on late tax payment, you need to pay your taxes on or before the due date.
Benefits of Filing a Tax Extension
Filing a Tax Extension is a relatively simple process, and gives you the following benefits:
1) Saving Penalty Amount: If you submit a tax extension, the IRS won’t penalize you for late filing. However, you will have to file it well within the deadline.
2) Automatic Process: Tax extension, being automatic, neither requires your signature nor a reason from you for submitting the extension request. On submission of the request, you will be automatically granted 5-6 months by the IRS for filing your return.
3) Saves Effort: You do not need to rush to collect the requisite statements and documents before the due date. After filing for an extension, you will have sufficient time to go through the details and ensure they are exact and correct.
Penalties, Interests, and Late Fees imposed by the IRS
The IRS imposes the highest penalty for failing to file your tax return if you owe taxes. The fee for late filing of returns will be a minimum of 5% of your taxes unpaid each month. If you fail to file a return within 60 days from the actual due date, your minimum penalty will be 100% of your owed taxes or $135, whichever is the smaller amount.
On the other hand, if you have filed for a tax extension on or before the due date, you won’t have to incur the above mentioned late filing charges, even if you owe taxes. Tax extension will help you save on late filing charges but you will have to pay the interest on owed taxes.
It is highly recommended that if you owe taxes, and can’t file your tax return before the deadline, apply for a tax extension. It will, at least, reduce the total amount you owe to the IRS.
Procedure of Fling an Extension
To file for a tax extension, all you have to do is fill up an IRS form and submit it. If you are an individual tax paying entity, you have to fill in IRS Form 4868 and if you a business entity, you have to fill up IRS Form 7004.
There are two modes of submitting your tax extension form – online or by paper mail. E-filing tax extension will be the simpler procedure of the two as it requires just a few minutes and will save your time and efforts both. For e-filing your tax extension, you can take the services of authorized e-file providers as well. Therefore, you should file tax extension online so the IRS won’t penalize you.
If you require more time to file your tax returns (http://www.australia.gov.au/topics/economy-money-and-tax/tax/tax-returns) and want to save your late filing penalty, then Tax Extension is what you should opt for. You can also save on time and effort if you file it online. The IRS won’t penalize you if you file tax extension online or by mail on time.
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