Tax season 2019: four myths and the truth about tax extension filing
The deadline for filing your 2018 tax return is April 15, 2019. If you aren’t ready to tackle your taxes yet, you can apply for an extension and delay filing your return until October 15th.
A tax extension makes sense if you’re missing key documents, dealing with an unexpected life event or simply running out of time to get your taxes done by the deadline. Whatever your reason, it’s a simple process to apply for those extra months.
It’s important to understand what tax extensions do and don’t do so you aren’t running into any unexpected surprises. There are many misconceptions that can cost you if you get confused.
Let’s look at and dispel four of the most common myths surrounding tax extensions.
Filing a tax extension is difficult, and only some people qualify
Owing taxes is usually only a concern for the self-employed. If you work for an employer, they should already withhold taxes from your paychecks, and you probably won’t owe the government a dime.
As long as you’ve filled out the form correctly and you submit it by April 15th, you’ll most likely qualify for an extension. There’s no need to explain why you want it and there are no restrictions on who may request an extension.
The Form 4868 gives you the right to have six more months for tax return completion. However, the extension of time given for filing a tax return does not concern the actual tax payment. It must be done by the due date. Just fill out some basic personal information and estimate your outstanding tax liability for the year based on your personal records and the tax forms you’ve received from your employer. Then, submit the form electronically.
Note: Partnerships, corporations or S corporations fill out and submit IRS Form 7004.
If you file a tax extension, you won’t have to pay taxes until October
You’re never required to pay your taxes by April 15th, extension or not. But if you don’t, the IRS will begin charging you interest on any outstanding balance.
First, there’s a 5% monthly failure-to-file penalty, with a maximum penalty of 25% for those who don’t file a return or an extension by April 15th. Then, there’s also a 0.5% monthly failure-to-pay penalty. This accrues until you pay back what you owe or until the penalty reaches 25% of your outstanding balance. If both penalties are in place, you’ll pay a maximum 5% penalty per month and 25% overall.
A tax extension won’t get you out of the failure-to-pay penalty, but it can eliminate the failure-to-file penalty.
However, if you don’t file your return by October 15th, the failure-to-file penalty will kick in then.
A tax extension is an audit trigger
The IRS may choose to audit an individual’s taxes for a number of reasons. Reporting high income, making clerical errors on your taxes or failing to report taxable income, are common reasons for why an audit might be warranted.
In fact, an extension could lower your risk of being audited. It gives you more time to look over your return and verify that everything is accurate. If you rush through your return so you can submit it by the April 15th deadline and you make a mistake, like transposing numbers or failing to report some income, that could bring the IRS to your door.
Note: The fastest way to appeal an unfavorable audit is to file Form 12203 to the IRS electronically.
If you file an extension, you can’t file your taxes before October 15th
A tax extension simply gives you until October 15th to file your return, but you don’t need to wait that long. Once you’ve prepared your return, you can submit it at any time, even before the April 15th deadline. If you think there’s a chance you may need an extension, it’s best to request one just to be safe. But if you don’t need to use it, just file your taxes during the regular tax season.
With PDFfiller, individuals and businesses send their IRS tax extension forms faster, while making sure that all their financial info is protected. Prepare your Form 4868, Form 12203 or any other with PDFfiller. Once you open the form, a fillable field wizard will guide you through all the required fields before you click “Send to the IRS”. An email will notify you when your return has been delivered.
Some helpful blog posts
We have written plenty of blog posts related to tax season. So let’s bring you some more confidence by helping you better prepare for your tax filing.
- Read Tax season 2019: the deadlines and documents for your business to remind yourself about all of the important dates during tax season. Also, get familiar with the IRS forms that are relevant to you and your business before January 2019.
- Take a look at The individual taxpayer’s guide for the 2019 tax season to learn more about Form 1040 and other related documents. And HERE you can read more about the new format of Form 1040.
- In the 10 questions to ask when choosing a tax preparer blog, we tell you about how to choose the ideal candidate for preparing your taxes.
- And our latest blog – All you need to know about the tax forms to file before April 15th, is aimed at reminding you about all of the required forms you need to file before April 15th.
So pick yourself up and good luck!