Even if you File an Extension, You Must Still Pay Your Income Tax in Full by the Tax Deadline
Need more time to prepare your federal tax return? Traditionally, federal tax returns are due on April 15 or the first business day thereafter. However, the IRS does grant you an automatic extension to file your taxes every year, as long as you complete Form 4868.
Common reasons for requesting an extension include:
- Incomplete tax documentation – For example, if you’ve lost the W-2 your employer sent you and are waiting for a duplicate to arrive, you are better off filing the extension and waiting for the W-2.
- Unexpected life events – Even if you planned for it, sometimes life events, such as death or illness in your family or fall victim to a natural disaster, may interfere with your ability to file.
- IRA conversions – The IRS allows you to “recharacterize” your Roth IRA back into a traditional IRA at any time before you file your tax return, which allows you to avoid paying tax on the balance.
- Late-payment penalties – If you fail to file a return by the extension date, the IRS penalty increases to 5 percent per month, for a maximum penalty of 25 percent.
Tax deadlines changed this year but please be aware that:
- An extension of time to file your return does not grant you any extension of time to pay your taxes.
- You should estimate and pay any owed taxes by your regular deadline to help avoid possible penalties.
- You must file your extension request no later than the regular due date of your return.
Get an extension when you make a payment
Regardless of when you file your tax return, if you do not pay the tax you owe by the tax filing deadline, the IRS penalties can be severe. An easy way to avoid the penalty is to make a tax payment with your debit card before the filing deadline. By paying all or part of your estimated income tax due and indicate that the payment is for an extension using Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or a credit or debit card. This way you won’t have to file a separate extension form 4868 and you will receive a confirmation number for your records, explained Daniel Ahart, chief tax officer at the tax preparation company Daniel Ahart Tax Service®
Again, if you need more time to file, you can easily file your extension online with Daniel Ahart Tax Service® before the dealine on May 17, 2021. Schedule a consultation with your tax experts now.
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