Tax Extension Cautionaries

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The IRS has a simple form, Form 4868, that provides you with an automatic six-month extension to file your taxes. The good news is that it’s easy to complete even with no accountant.

You could use the IRS’ Free File system online, look up the appropriate action at any IRS office or order it toll-free. If you’re using tax-preparation software at home you are able to file by computer and receive an acknowledgement via email.

The Free File system online will first ask you for your company, address and SSN. It then requires you to estimate your tax liability and send any balance due. If a person makes this payment and covers a minimum of 90% of one’s real liability they will not owe a late-filing or late-payment penalty.

With Form 4868 you have until Oct. 15 to take advantage of this extension and send in your return. Regardless of the form, if you feel you owe money towards the government you need to send it in before the tax filing deadline.

You need to file the form from the regular due date of the return. It’s an automatic extension and you don’t need to provide the IRS any reason; you will get the extension regardless of the reason.
You can fix a messed up tax return by yourself and it’s possible to need only one extension but this means you need to file by Oct. 15.

How penalties can hurt you:
It may hurt should you do not file for the extension. The IRS can charge you a late-filing penalty of 5% of the tax not paid by way of the due date for each month — or partial month — your return is late. Generally, the utmost penalty is 25%. In case your return is more than 60 days late, the minimum penalty is $100 or the balance with the tax due on your return, whichever is smaller.

Along with the penalty for filing late, there is a penalty for paying late. It is generally 0.5% of the unpaid tax through the due date. It’s charged for the portion of a month that the tax is unpaid. Essentially the highest penalty is 25%.

Either way, though, you’ll owe interest on any tax not paid before the due date of the return; this interest runs until you pay the tax. Even though you may have a legitimate reason for failing to pay on time, you still owe the interest. Neither the interest nor the penalties are deductible.

If you’re away from the country.

The late-payment penalty could be excused in the event you can show “reasonable cause” for not paying on time. You might have reasonable cause if no less than 90% in the actual liability is before the regular due date of your return through withholding or estimated tax payments.

If you are a U.S. citizen or resident and had been out of the country, you automatically get a two-month extension to file your return without having to file Form 4868. You need to file by Oct. 15, however. “Out of the country” means either:

  • You’re serving inside the military (including naval service) outside the U.S.
  • You live outside the United States and Puerto Rico and your main workplace is outside the U.S. and Puerto Rico.

In conjunction with this information, anyone that is searching for additional information or has questions regarding tax extension should visit our website. We can help you develop numerous tax preparing and business strategies, so get in touch with us now and let us help get you prepared for the future. Take advantage of the information on our website and get in contact with any of our skilled tax extension business advisors and/or Enrolled Agents that will help or offer the tools you need for tax extension.


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As seen in Forbes Magazine, Karla Dennis is an expert tax and business strategist. As an enrolled agent, Karla is licensed to represent taxpayers in all 50 states. She holds a Masters in Taxation and Business Development and is the author of two books, Tax Storm and Against the Odds.

Karla, CEO of consultancy firm Karla Dennis And Associates, Inc.™, has saved her clients thousands of dollars and has been featured in various media outlets such as Forbes, MSNBC, KTLA, Yahoo! Finance, and SmartMoney, marking her as the ultimate tax expert.

As of 2014, Karla became the new host on the “Mind Your Business” radio show, KTLK AM 1150, sharing her financial and business knowledge with the greater Orange County and Los Angeles areas. As a supporter of women’s rights and issues, Karla is part of the Women Network, an organization built to educate and mentor women. In addition, Karla is the radio host for Women Network Radio, a show that aims to uplift and empower women of all walks of life.

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