Income tax season finished on April 15th, and by that time, most of us should have filed our tax return. However, there might have been different cases on which such due date wasn’t met. Actually, this was the case for 14 million Americans who requested to have a tax extension, according to H&R Block. And even when filing for this 6-month extension might bring several benefits, we must pay attention no to miss the date.
In order to make the most out of the federal tax extension that is due by following Monday, we need to understand a couple of things. First, we need to know how the tax extension works. We should also be aware of the possible penalties we might face should we miss the extension date. Also, it is important that we remember the IRS offers payment plans and alternatives, just in case we need one.
How Does the Tax Extension Work?
There may be different situations that can impede the timely filing of our income tax return. Missing the April 15th due date happens more often than we think, and the Internal Revenue Service is aware, too. Luckily, there is a federal tax extension form that will grant a 6-month delay on April’s due date.
This is called Tax Form 4868, Application for Automatic Extension of Time to File U.S. Income Tax Return, and you can download it from the IRS website directly. To request the extension, just download the form, and mail it to the IRS once you’ve filled it. You can also do this electronically using tax software.
What Happens If I Miss the Tax Extension Due Date?
Once the IRS has granted the tax extension, we have until October 15th to file our taxes. One important aspect to consider is that the extension does not apply for any payments due. It will only give us extra time to finish the paperwork, but any amounts that we owe the IRS should be paid in April.
We should keep in mind that there are different penalties for not filing our tax return and nor paying them. If we missed the date to file our taxes, we’ll be subject to a penalty of 5% of the unpaid balance. This penalty has a limit of 25% of the tax balance we might have. If we filed our taxes but didn’t pay them, we’ll be subject to a penalty of 0.5% of such unpaid balance, with a limit of 25% also.
Are There Any Payment Plants Available?
The IRS is well aware that there might be situations beyond our control that can impede a timely payment. That’s why they offer different payment plans and alternatives that should enable us to cover any pending balance.
A Short-Term Payment Plant allows you to cover any balance you have in 120 days or less after the due date. This helps limit the penalties and interests you would accrue and doesn’t include any additional fees.
A Long-Term Payment Plan allows you to pay your balance in more than 120 days through automatic payments. This plan does include a fee of $31 if we apply for it online. It also comes with a $107 fee if we apply by phone, mail, or in person.