Today TaxMama® wants to talk about Extensions, Payments and End of Tax Season stuff.
Dear Friends and Family,
Today is April 17th. Don’t panic! Tax season isn’t quite over yet. You have until tomorrow to file your tax return or extension. Here are some last minute tips.
But before I do, let me remind you (and pass this on those friends – you know who they are) that tomorrow is the absolute deadline to file the 2013 tax return and still collect a refund from the IRS. There’s a BILLION dollars sitting there, unclaimed.
OK – this year’s tips. (You may have heard or read them before.)
Do not file your tax return if you’re not totally ready with all the information. Get an extension. It’s free…sort of. Don’t just skip it until you’re ready. The penalty for filing late is 5% per month, up to 25%. The extension makes those penalties disappear.
To get an extension – use Form 4868 for personal extensions. Use Form 7004 to extend gift tax returns and trust or estate tax returns. Most states will accept the IRS extension. But make sure your state complies.
When you expect to owe money, but cannot pay it all, don’t lie on Form 4868. Enter the approximate balance you expect to owe. Pay at least $25 or $50 with the extension. (Never lie on the extension or it will be invalid.)
If you owe money, you need to pay it with the extension. You can use your credit card – and pay a fee. Or you can pay online directly from your checking account with no fee using IRS’ Direct Pay. Make sure to select Form 4868 as the form and 2016 as the year you are paying.
If you absolutely cannot pay at this time because of a hardship, the IRS has a special form. Use Form 1127 to request an extension of time to pay for up to 18 months. There’s no guarantee they will accept it. But if they do accept this, you will avoid the late payment penalties. You will still owe the interest.
April 18th is also the last day to fund an IRA contribution for 2016.
And you need to make estimated tax payments for 2017, if you are self-employed or have investments. (Use the same payment links I gave you for the extension – just select Form 1040ES as the form – and use 2017 as the year.)
So you have a lot of demands on your money this week. What is the best strategy for allocating your dollars if your financial resources are limited? Read my 2012 Marketwatch column for guidance. The concepts and strategies are all still very valid. But use the links in today’s TaxQuip.
To make comments and toss in your own ideas, please drop into the TaxQuips Forum.
And remember, you can find answers to all kinds of questions about tax payments and other tax and business issues, free. Where? Where else? At www.TaxMama.com.
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