Personal Returns: Need More Time? Unable to Pay?


April 17th, 2018 is the official filing deadline for Form 1040, U.S. Individual Income Tax Return. Need more time to gather data to file a complete and accurate return? The IRS allows for an extension of time to file, NOT to pay. You can submit Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, to receive a six-month extension until October 15th, 2018. By filing this form, you won’t be subject to the late filing penalty. But remember, you must pay in at least 90% of the current tax (100% of the prior year or 110% if AGI is greater than $150,000 in 2016) to avoid late payment penalties during the extension period with the remaining balance paid with the filing of the return. This may require you to estimate your income, deductions and tax liability. A valid extension requires a reasonable tax estimate indicated on Form 4868, even if the amount due isn’t paid with the extension. So don’t delay! If you need more time to file, gather your tax information, contact your tax preparer and request an extension estimate.

What if you can’t pay your taxes? Don’t panic! You’re not alone; many taxpayers have found themselves in financial distress and unable to pay immediately. If you cannot pay the full amount of taxes you owe, you should still file your return (or extension) by the deadline and pay as much as you can to avoid penalties and interest. You also should contact the IRS to discuss your payment options, such as a short-term extension to pay, an installment agreement or an offer in compromise. In some cases, the IRS may even be willing to waive penalties. Remember though, no matter what option you choose, don’t ignore your tax obligations; they won’t go away but will likely get worse, resulting in tax liens or garnishment of wages. Remember, the IRS is far more willing to work with you if they believe you’re making reasonable efforts to resolve the issue on your end!

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