Life Support - Tax Facts
Too Little Time? An Extension to File May Make Sense
A Tax Fact from The Tax Institute at H&R Block
Tax procrastinators beware... you are not alone. Last tax season nearly 10 million taxpayers asked for an automatic six-month extension until October 15.
You may obtain an automatic six-month extension to file to October 15, 2008 by submitting Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. The form and instructions are available at the IRS website: http://www.irs.gov/formspubs/article/0,,id=98155,00.html.
There are several options for filing an extension and/or paying a balance due that you may want to consider:
Mail. Mail the Form 4868 and your check for the estimated balance due if applicable. By including a check for the balance due, you avoid additional penalties and interest from the Internal Revenue Service. Be sure to check Form 4868 instructions for the correct mailing address for filing your extension.
Telephone. From March 1 through April 15, you can e-file Form 4868 by telephone. You may pay a balance due by electronic funds transfer from your checking or savings account or you may wish to mail a check. If mailing a check, make sure it is postmarked by April 15. The Internal Revenue Service will accept a postmark as proof you met the extension deadline.
Tax software. You may e-file utilizing a purchased tax software program like TaxCut® or by going through a tax professional. The payment options are the same as for telephone e-filing. With all e-filing options, you will receive a confirmation number indicating that your return was received. Be sure to write the confirmation number down and keep it in a safe place.
Full or partial credit card payment. You may pay all or part of a balance due when you request an extension of time to file. The credit card payment options are listed on Form 4868. Please note that these services charge a nondeductible convenience fee.
Individuals outside the U.S. If you are residing outside of the U.S. at filing time, you have an automatic two-month extension to June 15 to file. You do not need to request this extension or submit any forms. If you need more time than this, file Form 4868 by June 15 to get an additional four-month extension to October 15. Note: You are not entitled to the automatic two-month extension if you are merely taking a vacation or are on a business trip outside the U.S.
Why File An Extension At All?
Without a valid extension, a late-filed return is subject to a 5% per month penalty on any unpaid balance. The maximum penalty is 25% when combined with the late payment penalty (see below). Late filing penalties are generally abated for:
And, if you know you're due a refund, but have run out of time to complete your return, you may still want to file for an extension to preserve your options.
Filing vs. Paying
Remember,
You may qualify for an extension of time to pay.
To qualify for an extension of time to pay, you must be able to establish to the satisfaction of the IRS that your assets, liabilities, income, and expenses are such that immediate payment would cause "severe loss and undue hardship." To request a payment extension, file Form 1127, Application for Extension of Time for Payment of Tax. If a payment extension is granted, you will avoid late payment penalties, but you will still have to pay interest on the balance due.
This Tax Fact is brought to you by The Tax Institute at H&R Block.
To view other helpful tax information or listen to our Tax Fact podcasts, visit www.digits.hrblock.com
As always...everyone's tax situation is different, so be sure to consult a tax professional or financial advisor before making important financial decisions.
This Tax Fact is for educational purposes only and is not intended to be a substitute for seeking personalized, professional advice, nor is it intended to be used to avoid IRS penalties.
A Tax Fact from The Tax Institute at H&R Block
Tax procrastinators beware... you are not alone. Last tax season nearly 10 million taxpayers asked for an automatic six-month extension until October 15.
You may obtain an automatic six-month extension to file to October 15, 2008 by submitting Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. The form and instructions are available at the IRS website: http://www.irs.gov/formspubs/article/0,,id=98155,00.html.
There are several options for filing an extension and/or paying a balance due that you may want to consider:
Mail. Mail the Form 4868 and your check for the estimated balance due if applicable. By including a check for the balance due, you avoid additional penalties and interest from the Internal Revenue Service. Be sure to check Form 4868 instructions for the correct mailing address for filing your extension.
Telephone. From March 1 through April 15, you can e-file Form 4868 by telephone. You may pay a balance due by electronic funds transfer from your checking or savings account or you may wish to mail a check. If mailing a check, make sure it is postmarked by April 15. The Internal Revenue Service will accept a postmark as proof you met the extension deadline.
Tax software. You may e-file utilizing a purchased tax software program like TaxCut® or by going through a tax professional. The payment options are the same as for telephone e-filing. With all e-filing options, you will receive a confirmation number indicating that your return was received. Be sure to write the confirmation number down and keep it in a safe place.
Full or partial credit card payment. You may pay all or part of a balance due when you request an extension of time to file. The credit card payment options are listed on Form 4868. Please note that these services charge a nondeductible convenience fee.
Individuals outside the U.S. If you are residing outside of the U.S. at filing time, you have an automatic two-month extension to June 15 to file. You do not need to request this extension or submit any forms. If you need more time than this, file Form 4868 by June 15 to get an additional four-month extension to October 15. Note: You are not entitled to the automatic two-month extension if you are merely taking a vacation or are on a business trip outside the U.S.
Why File An Extension At All?
Without a valid extension, a late-filed return is subject to a 5% per month penalty on any unpaid balance. The maximum penalty is 25% when combined with the late payment penalty (see below). Late filing penalties are generally abated for:
- Death or serious illness of a taxpayer of family member.
- Unavoidable absence on the filing date.
- Destruction of a residence or business records.
And, if you know you're due a refund, but have run out of time to complete your return, you may still want to file for an extension to preserve your options.
Filing vs. Paying
Remember,
- An extension of time to file is not an extension of time to pay!
- When you file your extension request, you must estimate any balance due and you should generally pay in as much of the balance due as you can.
- A late payment penalty is charged of .5% per month on any unpaid balance. The maximum penalty is 25%, when combined with any late filing penalty that is charged. This can really add up.
To qualify for an extension of time to pay, you must be able to establish to the satisfaction of the IRS that your assets, liabilities, income, and expenses are such that immediate payment would cause "severe loss and undue hardship." To request a payment extension, file Form 1127, Application for Extension of Time for Payment of Tax. If a payment extension is granted, you will avoid late payment penalties, but you will still have to pay interest on the balance due.
This Tax Fact is brought to you by The Tax Institute at H&R Block.
To view other helpful tax information or listen to our Tax Fact podcasts, visit www.digits.hrblock.com
As always...everyone's tax situation is different, so be sure to consult a tax professional or financial advisor before making important financial decisions.
This Tax Fact is for educational purposes only and is not intended to be a substitute for seeking personalized, professional advice, nor is it intended to be used to avoid IRS penalties.
