Tax day is looming, big time, people. Chances are, if you haven’t filed yet, or aren’t in the home-stretch of getting your paperwork together, it’s a pretty safe assumption that you aren’t going to make the April 15 deadline. Before you start panicking (and looking into fleeing the country to avoid the tax man), take a minute and a breather because you have options.
According to the IRS, around 12 million people file for an extension each year. Sounds simple right? Well, here are a few things to keep in mind on how to actually do it.
1. You have to file for the extension by April 15.
Anyone can file for an automatic extension, but you actually have to do it by April 15. Once you fill out Form 4868 you’ll have another six months to get those taxes done. Filing this is easy, and you can do it via the IRS Free File, just make sure to double-check with your state to see if you need to fill out a separate extension on that end.
2. You still have to pay up.
Keep in mind that the extension is buying you time on the paperwork, not for paying. Bummer, we know. Use a tax estimator (the IRS provides one) to estimate how much you owe. Failing to take action to pay on time means you’ll be hit with a penalty of between .5 percent to 1 percent of what you owe for each month your bill is outstanding.
3. If the issue is being able to pay on time, there are other options to consider.
If the issue is really that you don’t have enough money to pay your taxes at this exact moment, there are a few options to keep in mind. Experts say that in certain circumstances paying your taxes on a credit card can be the best way to go, since the interest rate and fees from using plastic can sometimes be less than the interest and penalties you’ll incur from paying your taxes late.
You can also request a short extension of between 60 to 120 days to pay your taxes (there is a penalty for this, but it’s a lower one then you’ll be hit with for filing late). The IRS also offers a payment plan option. You have to sign up using Form 9465-FS, which includes a fee, and then you’ll be billed monthly.
4. Owed money? You don’t even need to file for an extension.
If you’re actually owed money, you won’t be penalized for not filing your return on time. Just remember if you don’t do your taxes for three years running, if you’re owed a refund, the government is just going to keep it. Bottom line: If you’re owed money, get off the pot as soon as you can.
5. If you need some extra help, there are resources.
There are quite a few resources to take advantage of to get through this arduous process. Make less than $60,000 a year? Take advantage of the IRS “Free File” software to prepare and file your federal taxes. Make less than $53,000 and the Volunteer Income Tax Assistance program offers free tax help.