Are you rushing to meet the April 15 deadline to file your personal income taxes? Well, good news for procrastinators as you might be in luck. If you haven’t started preparing your 2013 tax return, or maybe you have more to report than the income on a W-2 and a 1099, here’s an easy solution: File for an extension.
Filing for an extension doesn’t make you any more susceptible to be the target of an IRS audit, so if you need it, take it. It is better to be well prepared than rushed and disorganized. An extension can get you an additional six months to organize all your tax information.
In order to get the extension, you will have to file a Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Tax Return”. You can file for an extension by sending a completed paper Form 4868 and postmarking it on or before the April 15, 2014 return filing deadline, or you can file for an extension electronically through the IRS website.
The process for electronically filing for an extension is simple: go to the IRS website and select the “Free File” service. You will set up a password-protected account and enter your personal information in the appropriate tax return form (e.g. Form 1040, Form 1040-EZ, etc.). Once your personal information is entered, select “File an Extension” from the options at top of the screen. Follow the instructions for entering your estimated taxes and taxes paid, and pay any difference in the estimated tax owed.
If you haven’t already prepared your 2013 tax return, how do you determine what amount to pay without underpaying? Well, you’ll have to calculate a reasonable estimate of taxes you owe to submit with Form 4868.
Once you’ve paid part or all of your estimated income tax electronically your extension will automatically process. But remember: you must pay your tax liability due and either file for the extension or file your tax return by April 15; otherwise you will be subjected to IRS penalties and interest. To avoid the late payment penalty, which is five percent per month of the unpaid balance, you must pay at least 90 percent of the total tax amount you owe. By paying the full 100 percent owed, you can also avoid paying the three percent interest fee.
Please note that according to the IRS, there are additional special extension filing rules that apply if you are:
- Living outside the U.S.,
- Out of the country when your 6-month extension expires, or
- Serving in a combat zone or a qualified hazardous duty area
To find out more information about filing for an extension, including the additional special rules above, you can go to Filing Information in IRS Publication 17.
The best way to avoid the stresses of filing your year-end tax return is to be prepared. There is still time left before the April 15 deadline hits. Here are some other helpful tax tips to get you ready:
- Get Organized – Taxes can be confusing. Set time aside to get all your information together before you begin the process to avoid any unnecessary headaches.
- File Online – You can file up until midnight on April 15. You can file online from anywhere; you don’t even have to get out of bed.
- Reduce your tax bill even more – Did you give to a charity last year and have you claimed all credits available to you? Be sure to include everything available to you to reduce your tax bill.
- File for free – FreeFile through the IRS and Turbo tax allow you to file your federal taxes for free if you meet the specified eligibility requirements.
- File an amendment – If you make an error or forget to take a deduction when filing and you realize it later, here’s your solution: file an amendment. Filing an amendment gives you three years to rectify your mistakes.
If the tax return deadline has crept up on you this year, don’t panic; an extension offers a simple solution. However, it is important that you still file for the extension by the April 15 deadline, and keep in mind you still have to submit a payment in addition to filing Form 4868.