Friday, April 19, 2013

Avoid Penalties with the IRS Tax Extension Deadline

Liberty Tax building
Liberty Income Tax

Now that the April 15th tax deadline is over, we can all relax again.

April 15, 2013 was the deadline to file individual tax returns to the Internal Revenue Service (IRS). This includes Form 1040, 1040A, & 1040EZ.

If you live in the U.S. and did not file by April 15, 2013, then hopefully you filed a six month extension – which can be done with Form 4868. Even if you file an extension, you still have to file your payment by April 15, 2013, or risk paying the late filing penalty. Now if the IRS owes you, you could be entitled to some interest on your money.

With a six-month extension, the last day to file individual tax returns to the IRS is: October 15, 2013.

Due to the Boston Marathon Bombing, residents of Suffolk County, MA are granted an automatic 3-month extension along with anyone who was in Boston area on April 15th. More information on this can be read here.

What is the Late Filing Penalty?

The IRS calculates the late filing penalty and charges interest based on the amount owed. If the IRS owes you money, there is no late filing penalty, and they may even pay you interest on your refund money.

If you are concerned about a late filing penalty, visit’s IRS Tax Penalties article, which explains how the following are calculated: Failure to File Penalty, Failure to Pay Penalty, and Interest.

I know many tax professionals that file extensions for themselves. They are sure to mail a check in to the IRS by April 15, 2013, because they know they owe money. They write a check over the amount that they think they owe, since they have not actually computed the actual amount owed yet. This is done to avoid paying a penalty or interest for any money owed to the IRS.

Then, when they file their own tax returns, they simply account for the tax payment, and they get the difference back from the IRS.

That's how the pros do it.

How did you do it?

Image source: MorgueFile; (no attribution required)

1 comment:

James Reynolds said...

Thanks for the information. There are many great irs tax help programs, but a lot of them want to charge you money on top of what you're going to spend to file.

Follow by Email