TAX TIP No. 69
Need more time to file? Just ask
"With an extension, you can get more time for filing, but you will owe interest on any underpayment, starting on the original date. If you underpay by more than 10 percent, you may be subject to a penalty," says Mark Luscombe, attorney and CCH principal federal tax analyst.
If you find your expected tax bill is much more than you're able to pay, you should try to pay at least something. This will help keep down those accruing penalty and interest charges.
You also could go ahead and make payment arrangements if you know you won't be able to come up with your full bill in a lump sum payment. When you file for your extension, also file Form 9465 seeking an installment payment arrangement. You'll automatically get up to three years to pay the tax balance in monthly installments if the bill is $10,000 or less and you're current with previous-year taxes.
Don't have a stamp for the form? Realized you needed
more time after the post office closed? No problem.
File Form 4868 electronically, either yourself from
your own computer or, if you use a paid preparer, have
that person file your request.
If you are making the electronic extensions
request yourself, your tax software should include the
form and instructions, but you might want to go ahead
and complete the paper form as a work sheet and then
transfer the information to your (or your preparer's)
computer. You also will need your previous year's tax
return, as information from that filing will be used
to verify your identity.
You can pay any due
tax with your electronic extension request by direct
debit from a bank account. In this case, have your financial
institution information (bank routing number and your
personal account number) handy, too.
Or, if you prefer, the IRS will let you mail in any tax
due (check or money order) after you've electronically
submitted Form 4868. You'll find the mailing
address for your state on Page 4 of the form's
instructions. Use the one in the middle column,
but in this case ignore the instruction to
also send the paper form, since you filed
You also can get an extension to file and pay any tax
due by charging it to your Visa, American Express, MasterCard
or Discover credit card.
The IRS has
contracted with two private
companies, Official Payments
Corp. and Link2Gov Corp.,
to handle taxpayer extension
requests. Call them toll-free
or go to their Web sites to
fill out an electronic extension
request and enter your charge
This method, however,
will cost you more than just the tax you owe. Each company
charges a service fee of 2.49 percent of your charge
tax bill carefully
Whether filing an extension request by phone, electronically
or on paper, estimate your expected final tax liability
as accurately as possible.
You can't simply decide
to pay the IRS $100 knowing your final bill will really
be closer to $1,000. If the agency later finds your
estimate to be far off the mark, it could void your
While tax law doesn't strictly require you to pay your tax bill in order to get more time to file, you should or you could end up owing more in the long run. The IRS will add interest to any tax bill not paid by the April deadline, plus a late-payment penalty.
And if you're
due a refund -- and yes, even
people who are getting back
money from the IRS put off filing
their returns -- an extension
request isn't necessary. There's
no penalty if you don't owe.
But remember that you won't
get your tax cash until after
you actually file your return.
Find more tax-filing information and tips in Bankrate's Tax Guide.
Updated: April 13, 2008