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Here's what to do if you can't get your taxes done on time

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What if you can't get your federal income taxes done on time?

You can file for an automatic, six-month extension on your federal return — no explanation is necessary. Just fill out Form 4868 and file it by midnight Tuesday. Then you will have until Oct. 15 to complete your return and file it.

The Internal Revenue Service expects to receive more than 12 million extension forms this tax season. A common reason for filing an extension, said Rebecca Pavese, a certified public accountant, might be that you lack all the documents necessary to complete your return.

Some people, however, seek extensions simply because of procrastination, said Jeffrey A. Porter, CPA.

Filing for an extension means you won't have to pay a hefty late-filing penalty (typically 5 percent of any unpaid balance each month, up to 25 percent of the total).

However, it's important to note that filing for an extension does not give you more time to pay your taxes, if you owe them. You should make your best estimate of what you owe, and pay it by the deadline. Otherwise, you will owe late payment penalties and interest. There's no late-filing penalty if you are owed a refund.

Andrew M. Porter, CPA, suggests that you estimate what you owe as best you can, then add a cushion — say, 5 percent — to avoid an underpayment penalty. The goal is to pay at least 90 percent of what you owe by the due date. If you overpaid, you will get the extra money back when you file your return.

Since penalties for filing late without an extension are generally greater than those for paying late, there is really no good reason not to file for an extension, he said: "Always file an extension, even if you can't pay."

Here are some additional questions about filing and paying taxes:

What if I miss the filing deadline and haven't filed for an extension?

File your return as soon as possible. Then, when you receive a penalty notice, you should contact the IRS and explain the situation. The agency won't waive interest, but it may waive penalties, if you have a good reason for missing the deadline — say, you were in a car accident in March or you were ill and in the hospital.

Does filing for a federal extension mean I automatically get more time to file my state tax return as well?

No.

What if I can't afford to pay the taxes I owe?

The IRS advises you to file your return or an extension and pay what you can to reduce interest and penalties. Then contact the agency to discuss payment options. You may be able to receive a short-term extension to pay, if you expect to have the money you need shortly. Or you may qualify for a longer-term installment plan. If you owe $50,000 or less in combined taxes, penalties and interest, you can apply online; otherwise, you must fill out a more detailed form and mail it in.

If you don't pay, and don't try to work with the IRS, the agency can take more aggressive steps, such as garnishing your wages.

Here's what to do if you can't get your taxes done on time 04/11/14 [Last modified: Sunday, April 13, 2014 7:56pm]
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