Tax day is here. If you’ve procrastinated until now, there isn’t much time left to file and pay your taxes. By ignoring this annual chore, you’re facing penalties and interest charges. Further negligence of unpaid taxes can lead to an IRS levy on your wages and bank accounts. However, a few last-minute moves can help you dodge the expensive costs of missing the April 15 deadline.
Regardless of the reason that you’re unable to file a complete tax return on time, you can file for an extension by using Form 4868. In 2012, the Internal Service Revenue received 10.7 million extension forms. You’ll be granted six extra months to submit your tax return by Oct. 15. But, you still have to pay your taxes by April 15.
Failing to file your tax return will result in a penalty of 5% of the amount due for each month that the return is late (for a maximum of 25%). A return that is more than 60 days late will incur a minimum penalty of $135 or the balance of the tax due, whichever is smaller.
Failing to pay your taxes by April 15 will result in a monthly penalty of 0.5% to 1% of any taxes left unpaid (for a maximum of 25%).
In either case, the penalties can be waived with a “reasonable cause” for not paying on time.
But, more likely than not, you’re procrastinating or you simply need more time to prepare your return.
Form 4868 can be filed electronically through the IRS e-file program, your tax software or your tax professional, which can easily be done without missing the deadline. As part of the filing extension, you must estimate your total 2012 tax liability and pay part or all of it by April 15. (If you overpay, you’ll avoid the late payment penalty and the amount overpaid will be returned in the form of a tax refund.)
Payment can be made by electronic funds transfer, debit card, credit card, check or money order. There are fees involved with using a debit card or credit card to pay your taxes.
If you decide to file for tax extension by mailing paper forms or send check or money order for tax payments, they must be postmarked by April 15. Since it’s crunch time, electronic filing combined with electronic funds transfer would be the quickest way to submit your tax-filing extension form.
Those who don’t owe any taxes should not have to worry about missing the April 15 deadline. However, if you’re eligible for a refund, file your tax return as soon as possible because that’s your money that could be put toward better use, like in a savings or retirement account. (The statute of limitations on a tax refund is 3 years — you lose it after that time period.)