It's tax day, and if you're not done, just file for an extension instead of rushing to finish, experts say. It's easy to get an extension, and the penalty for not filing anything at all is high.
On Monday – tax day – at 10 a.m. people were lugging in boxes of records so Dallas CPA Bill Dendy could file their taxes.
His reaction: “Oh, no!”
“It’s very difficult to do the return accurately,” he says. “But there is time to file for an extension.”
Indeed, if you are planning to rush home from work Monday to try to beat the midnight filing deadline, consider asking for an extension instead. Accountants and even the Internal Revenue Service say it’s important to get the return done accurately even if it means missing the deadline. However, asking for another six months does not mean that you don’t owe the IRS money, if you haven’t paid enough.
“You are still required to pay what you owe by April 15,” says Dean Patterson, a spokesman for the IRS. “The extension is just to get your return in order.”
In other words, if you think you are going to owe money to Uncle Sam, you’re better off paying an estimated tax. Otherwise, if you don’t pay the estimated tax, you could ultimately end up paying the tax plus interest and a penalty.
How does this work?
Filing for an extension (form 4868) can be done electronically through the Free File link on IRS.gov, no matter what a household’s income.
When filing for an extension, the IRS requires filers to give a good ballpark estimate of taxes owed. If the taxpayer expects to owe the government, they need to make an estimated payment when asking for an extension.
“We understand the filers may not have all their records,” says Eric Smith, another IRS spokesman. “But if they hit it pretty well, they won’t owe any interest or late penalties.”
Anyone filing for an extension will have lots of company. According to the IRS, last year, some 10.7 million Americans filed for more time, a little bit more than the average of 10 million the previous couple of years. Last year, about half the requests for extensions were filed electronically.