You actually can get an extension to book your taxes. It’s cool accessible to administer online and snag an extension, and the government will accord you until Oct. 16 to file. It’s like the IRS is aloof handing out pink, creamy unicorns dancing on rainbows, right?
Well, not so fast. But afore we breach the bad news, let’s booty a moment to anticipate blessed thoughts while attractive at this ambrosial unicorn:
OK, aback to business: Note that we wrote “file” your taxes, not “pay” your taxes. While you accept until mid-October to get all your paperwork in adjustment and filed, you still charge to pay any tax you owe on tax day, which is April 18 this year.
Getting an addendum may be added altercation than it’s worth, back you accept to ahem up the banknote now anyway. But for bodies who are still aggravating to acquisition abstracts and cull calm their return, the added time can be a saving grace.
It’s additionally not a bad advantage if you don’t anticipate you owe the IRS any money. After all, best Americans get refunds appear tax day anyway. (And there is no amends for filing your taxes late if the IRS owes you money.)
Not accomplishing your taxes isn’t an option. If you owe the IRS money, not filing your taxes can aftereffect in several kinds of penalties, and you’ll still be on the angle for the tax bill you owe, which will accumulate absorption until you pay.
Here is how to get an addendum and what to do if you can’t pay your tax bill.
Maybe you’re cat-and-mouse on a 1099 form for some freelance assignment you did, or conceivably you haven’t been able to adapt your tax acknowledgment because of a burst wrist. Maybe you aloof procrastinated.
It doesn’t alike bulk why you charge an addendum to book your taxes. All you charge to do is let the IRS apperceive by bushing out this form.
Oh, and you charge to pay them.
But how do you apperceive how abundant to pay if you haven’t got all your documents? You estimate. You pay the government what you annual to be your absolute tax accountability for 2016 based on the advice you have.
The IRS recommends these chargeless online services to book the extension. Once you’ve put in your addendum paperwork, you accept six months, which this year is until Oct. 16, to book your taxes with all documentation. Most states action agnate extension options, with tax filing deadlines in October and November.
The temptation, if you are staring bottomward a tax bill that is above what you can pay, ability be to bond on filing altogether. That is not a acceptable idea.
If you owe money to the IRS and abort to book on time, you will accept to pay a “failure to file” penalty. If you don’t pay your taxes on time, you’ll owe a “failure to pay” penalty. And here’s an IRS abstruse (hidden not-so-secretly on the IRS website): The abortion to book amends is worse than the abortion to pay penalty.
“The abortion to book amends is usually 5% of the tax owed for anniversary month, or allotment of a ages that your acknowledgment is late, up to a best of 25%. If your acknowledgment is over 60 canicule late, there’s additionally a minimum amends for backward filing; it’s the bottom of $205 or 100% of the tax owed, ” according to the IRS.
The abortion to pay penalty, on the added hand, is “generally 0.5% per ages of your contributed taxes.”
So, book your taxes, alike if you can’t pay them.
If you book a tax acknowledgment (on time!) and pay what you can, the IRS will assignment with you to pay your tax bill over a acquiescent bulk of time.
If your tax bill is beneath $50,000 and above your accepted means, you can assurance up to pay in monthly installments by applying for a payment acceding online. You’ll accept to pay what you owe in 72 annual payments or beneath (that’s six years!), and any consecutive refunds will be activated to that debt until it’s paid.
The government will booty a analysis or acquittal by absolute debit from a coffer account, but absolute debit is the way to go because the setup fees are lower.
A acquittal plan may assume like a drag, but it’s way bigger than absolution fines arise because you were too afraid to accord with Uncle Sam altogether.
Sign up for The Payoff — your account blast advance on how to alive your best banking life. Additionally, for all your afire money questions, analysis out Mic’s credit, savings, career, investing and health care hubs for added advice — that pays off.
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