Tax Extensions
With the impending tax deadline coming up on Monday at midnight for most of us, I figured our normal Tuesday article schedule on Money Stuffed might be a bit late to mention tax extensions so I’m bumping up this article a couple of days.
If you don’t think you can have your taxes completed by the deadline, please, don’t procrastinate; send in an application for a tax extension! The IRS was kind enough this year to make the extensions 6 months, meaning you’ll have until October 16th to file (last year, it would have taken TWO extensions to get 6 months). Here’s the IRS webpage on extensions and form 4868 used to file the extension. Some tax programs offer electronic assistance with filing an extension and so can any tax advisor you are using.
Things to keep in mind about an extension:
- If you owe money, you need to pay estimated taxes when you file the extension.
- If you do not pay the correct amount of taxes when you file the extension, you will owe the IRS interest.
- You will owe late fees if 90% of your due taxes are not paid when you file for your extension by the April deadline.
- If you do not owe money, you will not owe any interest or penalties.
Ways to pay the IRS if you don’t have the cash:
- Set up an installment agreement with the IRS. There is a $43 setup fee. The funny thing about setting up an installment agreement with the IRS is that they don’t even seem to recommend it. Check out this page on how you can save money using alternative methods of payment. It’s basically an IRS page trying to talk you out of the installment agreement.
- Use a credit card. It will cost you 2.49% more because you’re paying a service charge for this.
- Take a credit card cash advance if you can find a deal that’s better than the above two. If you’re doing your taxes the night before the deadline, though, I suspect you might not have the time to do the research on this.
- Take a personal loan from a bank or relative.
- Generally dangerous and unattractive ways of getting money include borrowing from a 401k, borrowing from life insurance or taking a home equity loan. Only resort to these options if you are absolutely backed into a corner and don’t see any other way to pay the IRS.
Finally, a special note to all of you last-minute people: may your numbers add up correctly, may they be in your favor and you remain free from audit. Now go hop to it and do your taxes or file your extension!
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