i) Individual federal tax returns that were granted an automatic six-month extension are due on October 15.
ii) If you have insurance through the Health Insurance Marketplace, you may be getting advance payments of the premium tax credit. These are paid directly to your insurance company and lower your monthly premium. Any changes in your circumstances may affect your premium tax credit. Now is a good time to see if you need to adjust the premium assistance you are receiving, so you don’t end up paying back the IRS.
For most American taxpayers, April 15 is Tax Day—the due date for filing their tax return. However, over 10 million taxpayers choose to file an extension. But what exactly does that mean?
What is a Tax Return Extension
An extension is a request to the IRS for extra time to file your tax return, but it does not extend the time you have to pay any tax due. You will owe interest on any amount not paid by the April 15 deadline, plus you may owe penalties.
There are two basic penalties that the IRS typically imposes:
i) A late filing penalty, and
ii) A late payment penalty.
If you file an extension and then file by the October 15 deadline, you’ll avoid the 5% per month late filing penalty. You still may be subject to the late payment penalty if you didn’t pay any tax due by April 15.
If you choose to file an extension, include any amount that you think you might owe to the IRS.
The IRS will automatically grant you an additional six months to file your return. Having extra time to finish your return is often necessary, especially if you are still waiting for tax documents to arrive in the mail or you need additional time to organize your tax deductions.
Some taxpayers worry that they are more likely to be audited by the IRS if they request an extension. This isn’t true! The IRS uses the same audit determinations on all tax returns filed.
“A penny saved is a penny earned.” ~Benjamin Franklin
On September 3, 1833, the New York Sun first appeared, marking the beginning of the “penny press,” inexpensive newspapers sold on sidewalks by newspaper boys. The paper focused on human interest stories and sensationalism. By 1836 it was the largest seller in America with a circulation of 30,000.
Rita Bhayani is a Certified Public Accountant and a Certified Management Accountant practicing at Pleasanton, CA and she protects the clients from the IRS. She provides tax planning, accounting, payroll and outsourced CFO services too. For more information log on to www.ritacpa.net. Reprinted with permission from the National Association of Tax Professionals.