EVEN though taxpayers have a few extra days this year to file their federal income tax returns, some still won’t make the deadline. So with tax day approaching, it’s time to think about filing an extension.þþThe Internal Revenue Service projects that it will receive 13.5 million requests for extensions of time to file this year. An extension grants an extra six months to prepare and file a federal income tax return.þþWhy ask for extra time? Extensions can be a good idea if taxpayers receive necessary forms late, said Melissa M. Labant, director of tax advocacy with the American Institute of Certified Public Accountants. Forms like Schedule K-1, for instance, which shows income from partnerships, are habitually tardy and are becoming more common as more people invest through partnerships. “If you’re missing information,” she said, “you’ll need to file an extension.”þþIn addition to late-arriving forms, confusion over new documents, like the 1095-C issued to people with health coverage through big employers, is probably delaying the filing of returns as well, said Douglas Stives, a professor of accounting at Monmouth University and a consultant to the Curchin Group, an accounting firm in Red Bank, N.J. Tax preparers are feeling the time crunch, he said, and may suggest that clients file extensions, so returns can be completed at a more measured pace.þþFiling an extension, he said, can help reduce errors made because of haste and avoid the need to file an amended tax return. Mr. Stives said he considered extensions preferable to amended returns, which must be submitted on paper and so may receive more scrutiny. “You’re drawing attention to your return,” he said, “and that’s the last thing you want to do.”þþMost important, filing an extension will allow you avoid a penalty for filing late, which is typically 5 percent per month of any tax owed, up to a maximum of 25 percent, Ms. Labant said.þþAn important thing to remember, however, is that while filing an extension gives you more time to file your return, it does not provide extra time to pay any tax you may owe. So filers should do their best to calculate any tax due and pay it.þþIf you can’t pay what you owe, Ms. Labant said, pay what you can, then contact the I.R.S. to discuss an installment plan for the balance. Don’t wait until you hear from the agency, she said. “It’s better to contact them first.”þþHere are some questions and answers about tax return extensions:þþ■ How do I file for an extension?þþFiling for an extension is simple and is generally automatic. You don’t need to give a reason for your request. You can do it on paper by sending Form 4868 in the mail. Or you may submit the form electronically using tax preparation software or the I.R.S.’s Free File program, which provides free tax software online. (The I.R.S. says that while you must meet income criteria to file a tax return using Free File, anyone can use it to submit an extension, regardless of income.)þþAnother way is to make a tax payment, using an option like the I.R.S.’s free Direct Pay service, which pulls the funds directly from your bank account. You don’t need to register for Direct Pay, as is the case with some other payment options. According to the I.R.S., filers using Direct Pay should “select Form 4868 to indicate that it is for an extension.” Then, “You’ll get a confirmation of your payment, and you won’t have to separately file Form 4868.”þþThe deadline for filing the extension is the same as the deadline for filing a return: midnight Monday, in most states.þþ■ What is the deadline for submitting my tax return, if I file for an extension?þþThis year, the extended tax filing deadline is Oct. 17. You should file as soon as you can before then, however, to minimize any interest or penalties you may owe on taxes due, Ms. Labant said.þþ■ Does filing a federal extension also give me more time to file my state tax return?þþNo. States may have different forms and requirements, so you should check with your state tax agency for details.
Source: NY Times
