This guest post was provided by Manny Davis, a tax writer that provides his readers with tax news, guidance and more. His website guides people through various tax problems including tax penalties, unfiled tax returns, IRS collections and more.
With the tax filing deadline approaching, if you have not yet prepared and filed your return, you may be starting to stress or even panic about being ready on time. This is especially true for those individuals who have complicated returns. With the tax deadline being April 18th this year, you do have a few extra days to file, but what if that is still not enough time? Any taxpayer can file for an automatic six month tax extension and make their new deadline October 17, 2011 as long as they file the extension by April 18th, 2011. Here is an overview of how the extension works along with how filing for an extension can be particularly beneficial under certain circumstances.
Who Should File For An IRS Extension?
Bottom line is that anyone can file for an extension. Therefore, anyone who needs extra time, regardless of the reason, is eligible to apply. Here are some circumstances when filing for an extension is especially beneficial:
- Complicated or Special Tax Credits: An extension can be especially beneficial if you have a complicated return or special tax credit circumstances. In these instances, it is best to take your time by filing for an extension rather than filing a corrected return later.
- Missing Documentation: If you are missing critical documentation needed to take certain deductions on your return, you are better off filing for an extension.
- Personal Reasons: If you are sick, lost a family member or close friend, experienced a natural disaster and so on, it may be in your best interest to file for an extension. You want to be sure you are able to clearly think and process all information prior to filing your tax return to prevent errors; you do not want to realize down the road that you missed a big tax credit or forgot to claim some income, because generally it is more of a hassle to file an amended return than to just file for an extension.
- Busy Accountant : Maybe you made a late appointment with your accountant, and you know he will be rushed to fit you in. It could be a good idea to wait until you are sure your accountant will give your tax return the time it deserves.
- Any Other Reason You Want: The IRS does not question why you want an extension. Maybe you just do not feel like doing your taxes yet, that is a completely legitimate reason.
How To File For An Extension
Filing for an extension is a fairly simple process and can be done in one of three different ways:
- You can e-file form 4868 either through your tax preparer or on your own using a program such as TurboTax.
- You can print out form 4868 from the IRS website, fill it out and mail it the IRS.
- You can make an estimated tax payment and file your return through an approved IRS service provider. This option requires the use of a credit or debit card. To do this you can go to www.irs.gov/e-pay. Once your payment is made, you do not need to file a paper form 4868, just be sure to hold onto your confirmation number after payment.
It is crucial to point out that while you can apply for an extension to file your tax return, you will still need to pay your tax bill by April 18th. If you fail to do so you will be hit with interest and penalty fees. Before filing for an extension you will want to estimate your taxes due and include payment with your extension.
In conclusion, filing for an extension is a great means to avoid the hefty failure to pay tax penalty if you owe taxes. At the same time, it is important to keep in mind that these extensions are not a means to avoid a tax bill. If you are unsure whether or not filing for an extension is right for you, your best bet will be to contact a tax professional and ask for advice. One thing to keep in mind is that if you are owed a refund, the IRS will hold onto that money longer but will not pay you interest on it. Keep in mind that the sooner you receive your refund the sooner you can earn some interest on it, pay off debts, or anything else that can better your financial situation.