The tax deadline is almost here and if you have not filed your tax return, thinking that filing an extension will delay the inevitable, then you are wrong.
Filing for an extension does not give you as much breathing space as you would like and here are a few things that you should know before filing for an extension.
You Still Have to File a Tax Return
Filing for an extension means you get an automatic six-month reprieve. But for that to happen, you still have to file. Using Form 4868, you can easily file for an extension.
You Will Have to Make a Payment to The IRS
Filing for an extension does not absolve you of money you owe the IRS. You will need to make a good estimate of how much you owe to the IRS and either pay the whole amount or some of it with your extension request.
You Might Have to Pay Interest
If the estimated payment you made to the IRS ends up being less than what you actually owe, then you’ll have to pay interest on the difference.
The interest runs until you pay the tax.
You Might Have to Pay Late-Payment Penalty
According to the IRS, the penalty is 0.5% per month of the outstanding tax not paid by April 18th, 2016. It can be up to 25% in some cases.
However, you are off the hook if you have paid 90% of your actual tax liability by the April deadline.
Tax Help MD
Filing for an extension and not sure whether you should go ahead with it or not? No need to be confused anymore! Call our tax experts at Tax Help MD on 888-632-4506 and get free advice and consultation.