Tax Extension? Here’s Why You Might Not Make the April Deadline
A few years ago, I ran two small businesses, one of which was a freelance writer. When the tax season comes, it’s hard for me to track my quarterly estimated taxes, organize 1099s and figure out which business expenses are deductible.
After talking to the tax staff, I decided that I could not standardize before the April 15 deadline and had to ask for an extension. Fortunately, that year, California provided Automatic tax expansion All residents as of November 16.
While that extra time allowed me to compile everything I needed to hand it over to a tax professional, I actually wish I could come up with it on time. First, I could have used a lot of tax refunds and the IRS owed me to achieve it in the summer towards my financial goals. Also, the late time for submission has me re-prepared for the next tax season.
Depending on your situation, you may need to start this year’s tax extension later this month. This is what you need to know if you need more time to submit your return.
Why submit an extension?
Since I haven’t kept up with all the financial information and records, I don’t have the confidence that I’ll have enough time to double-check everything and compile it for the accountant on time.
Whether you’re waiting for records, paperwork, or dealing with a family emergency or natural disaster, millions of U.S. taxpayers are late because they have a hard time completing paperwork for April deadlines in time.
Whatever your reason, submitting the extension will give you an extra six months to submit your return. You must submit your return by the October 15 deadline or you will be fined for delays. However, you still have to pay any taxes before the spring filing date (more below).
Can you also extend the payment deadline?
If you know you will receive a refund when submitting a return, you won’t be fined if you delay submitting a return. However, if you know what money you owe to the IRS, you must put the tax payment deadline. Although any taxes to be paid before submitting actual gains seem to be lagging behind, it’s all about estimates.
For example, if you are using tax software like TurboTax, you just enter the information you have and make the best guess about anything missing. Then, you can estimate the content of the IRS you may owe even if you don’t submit your return.
If you’re just waiting for a message like business expenses, Janet Berry-Johnson Firefly Financial Organizationit is recommended to use last year’s figures.
Tai Stewart said if you don’t have major changes to your tax return from last year, you need to make sure you’re paying for what you’ve owed at least last year. Help with financial solutions.
If you fail to pay the fees owed when requesting an extension, you may be fined. To avoid such fines, you will need to pay at least 90% of the fees you owe this year, or 100% of the previous year, whichever is less.
Why is it better to submit before the spring deadline?
There are many reasons to submit taxes before the April deadline. For example, you need to complete a tax return on hand to get approval for a mortgage, apply for small business funds, or complete a FAFSA for federal student financial aid, Stewart said.
According to Berry-Johnson, documents submitted earlier this year can also help you withstand identity theft. Identity thieves can grasp your name and social security number and submit a refund before you. If this happens, it may be denied when filing a tax return.
“At that time, you have to submit a paper return and send a return with this tax form and a copy of your photo ID, which may take several months for the IRS to process.”
If you are a victim of tax fraud or identity theft, it can take two years to recover tax rebates, which adds headaches and troubles.
What if you can’t afford to pay taxes on time?
Since I owe an IRS business effort, I decided to ask for an installment plan, which was a fairly simple process.
If you can’t pay all the taxes you owe on the deadline, pay everything you can afford, Berry-Johnson said. Don’t avoid submitting returns just because you can’t pay in full. You never want to be hit by fines and interest fees.
“If you owe $500 and only $100, pay $100,” she said. Although many taxpayers are afraid to work with the agency, the IRS is used to working with people’s situations. Here are a few payment methods for IRS:
Payment Plan: You can set up a Payment Plan via IRS Website or call the IRS and set it up by phone. There is no setup fee, but you must pay taxes within 180 days.
Installment Agreement: Another option is Installment Agreement (also known as a long-term payment plan), the IRS will make your unpaid fine half. There may be a setup fee, but if you earn a lower income, the IRS may give up altogether. You have up to 72 months to make monthly payments to pay off your balance.
What is the fine for not paying taxes?
Don’t file a tax return On time (or failure to submit an extension) will cost you 5% of your unpaid taxes per month. Your unpaid tax is capped at 25%.
In addition, there is a failure to pay a fine, which is 0.5% of the unpaid amount you have paid to the IRS.
If you neither submit an application and you are allowed to pay a fine, the maximum you owe is 25%. In addition, interest rates will also change in quarterly interest rates.
You can avoid fines and interest by paying debts before the due date or asking for a payment plan.
How do you submit an extension?
Submit extension It’s a simple process. You can make a request online on irs.gov or mail it at the bottom of the coupon 4868 Tax Form. You will need to include your name, address, social security number, and the fees you will pay through the extension. If you use tax preparation and archive software, you can also request extensions through the software.
Berry-Johnson said that when you submit an extension, some states will also automatically expand your status declaration form. However, some statuses require you to submit a separate extension.
How do you submit your taxes on time?
Over the past few years, I have proposed a way to keep accounting first. I will regularly reconcile transactions in QuickBooks online accounts. I also do any required tasks through my salary service Gusto.
When I slip and fall from time to time (life happens), I work with a bookkeeper who can help me with any discrepancies and make sure everything is ready by tax season. Tax professionals tend to start busy and less in December, so try to get in touch with them in advance.
“If you work with tax professionals like CPA or EA (Federal Tax Practitioner or Registered Agent) to help you submit taxes, communicate with them, and check when you need to submit the required documents and information.” Stewart .
Here are instructions on how to submit taxes on time in time during the next tax season:
- Create a tax document at the beginning of the year, a designated location that keeps tax-related forms and documents together, whether they are numbers or paper.
- For small business owners, make sure your book is up to date.
- Collect what you can and enter your best guess for whatever you are missing. Once you have all the information you need, you can proceed with the documentation.
