The tax deadline is here and, for many, this is your last chance to get an extension to file your return and avoid penalties and interest.
If you can’t file your taxes by May 17, you can request an extension until October 15 for any reason. Anyone can request an extension as long as they file the needed documents and pay their estimated tax bill before the deadline, according to the Internal Revenue Service.
Filing for an extension won’t postpone the payment of the taxes you owe to the IRS. If you don’t pay by May 17, you may incur penalty fees and interest on your unpaid balance after tax day. Penalties and interest will accrue on a monthly basis until the taxes you owe are paid in full to the agency.
If you’re expecting a tax refund, you must file your return first. It takes the IRS approximately 6 weeks to process a past due tax return.
Here’s what else you need to know.
How to file for an extension?
To file for an extension, you have to submit Form 4868 either electronically or as a paper form. You have to estimate your 2020 tax liability and pay the amount due.
Taxpayers can use Free File to electronically request the extension, which may direct them to a tax-filing program like TurboTax Extension that can help them calculate what they owe in taxes. If you file a paper form for an extension, the form should be postmarked on or before May 17 to be eligible for the extension.
What are the penalties for not filing or paying on time?
If you fail to file your taxes before May 17 and don’t request an extension, you’ll have to pay a late-filing penalty, which is usually 5% of the amount due for each month your return is late with the maximum penalty at 25%. If you can show a reasonable cause for the delay, the penalty can be waived. If so a statement should be attached to your return.
Additionally, the late-payment penalty for not paying your taxes is usually half of 1% per month of any tax that you don’t pay by the tax deadline with the maximum penalty you can owe being 25%. If you have a reasonable explanation for the delay and attach a statement to your return, you might now owe the penalty.
Can I get an extension to pay my taxes?
May 17 is your last chance to file Form 1127 and get an extension for paying your taxes.
In order to get an extension, you need to provide a complete statement demonstrating you were unable to pay your taxes due to “undue hardship” by showing a substantial financial loss. One example is selling a property at a sacrifice price.
Extensions to pay are usually limited to six months.
How to pay your taxes?
The IRS offers numerous options to pay your taxes. You can pay via direct deposit from your checking or savings account.
If you use tax preparation software or a tax professional to file your taxes, you can use an Electronic Funds Withdrawal (EFW) from your bank account when you e-file your return.
You can also use your debit or credit card. Additional fees may apply for those payments. Paying by check or money order is also an option along with paying cash at retail partners or at one of the IRS Taxpayer Assistance Centers (TACs).