Perspective: How filing for a tax extension can pile on to what you owe the IRS
A tax extension gives you six extra months to file your return — but it means paying added penalties and interest. By Michelle Singletary Michelle Singletary Personal finance columnist Email Bio Follow Columnist April 9 at 3:42 PM Thank goodness the federal tax code allows for procrastination and the things in life that happen, including events that are out of your control.
“You don’t have to explain why you’re asking for the extension,” the IRS informs filers in the instructions for Form 4868. “We’ll contact you only if your request is denied.” Galloway said that, in her practice, about 95 percent of taxpayers who end up needing to file for an extension are unaware that it doesn’t come with a postponement of their payment.Here’s the part of getting an extension that can seem perplexing. Because the extension doesn’t give you more time to pay, you have to estimate your tax liability.
“If your return is done, there’s no reason to wait, even if you can’t pay,” Smith said. “Tax returns are not like wine. They don’t get better with age.” To qualify, you need to make sure you’ve paid at least 90 percent of what ends up as your total tax liability by the April deadline. That 90 percent consists of withholding, estimated tax payments and any amount you send with the extension.
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