So although an extended deadline might sound good, it's wise to file for a tax extension only if absolutely necessary. The interest on your late taxes will accumulate as tax debt until you pay the IRS in full. You do not have to, nor should you, include the tax extension form. Attach a statement to your form with an explanation about why you filed taxes after the due date to apply for this extension. Much like the late payment penalty, you can avoid the minimum penalty by showing the IRS that you have a reasonable cause for filing after the due date. Currently, this rate is about 3 percent annually. Note that you might have to pay interest on unpaid taxes. If you believe that you have reasonable cause, attach a form explaining your reasons to your federal tax extension form. If you are going to pay your taxes late, you can avoid a penalty if you can show the IRS that you have a reasonable cause for not paying your taxes on time. The minimum penalty is $135 or 100 percent of the balance due, whichever is smaller.The maximum penalty for paying late is 25 percent of the total.The penalty for paying late is 5 percent for every month that the outstanding tax is not paid.If you might be subject to a penalty, keep the following in mind: Filing a tax extension keeps you square with the IRS and lets them know that you will be filing your complete paperwork later, but it does not grant you more time to pay the taxes you owe. Special tax filers must ensure their federal and state tax returns are in before their extensions expire.Įven if you file an extension, you will have to pay penalties if you do not pay your taxes by the regular tax due date. Failure to do so may delay the processing of your extension. Note: You must detach Form M-4868 where indicated before mailing. Retain the top portion of this application for your records.
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