So it’s April 1 and you’ve not even started your 2010 tax returns.
What’s a taxpayer to do? Answer: File an extension.
Here’s everything you need to know to get an extra 6 months to finish your return, starting with . . .
Top Five Reasons to File an Extension For Your Personal Tax Return
Looking for a reason for do you return in the lazy hazy days of summer? Do you need some encouragement to join America’s largest group of procrastinators? Then read on to discover five good reasons to join millions of other loyal American taxpayers who legally file their tax return late, without any late filing penalties and without being harassed by the IRS.
Reason #1: It’s free.
Of course, if you file Form 4868 by snail-mail, it will cost you a whopping 44 cents. If you e-file it, then it is free. You can use your own tax software program to e-file the extension, or check out the IRS website here for e-filing options:
http://www.irs.gov/taxtopics/tc304.html
And if you use a tax professional to prepare your returns, he/she should be able to prepare and file the extension for you.
Reason #2: It’s automatic.
You don’t have to have a good reason, a bad reason, or any reason at all. Just send in the form and that’s all there is to it. No need to come up with some lame excuse like “My dog ate my W-2.”
Reason #3: It’s relaxing.
Remember how you’ve spent April 14 or April 15 in previous years? It’s way past your bedtime, coffee pot still brewing, an opened bottle of Tylenol on top of your calculator, papers strewn all over your desk, receipts everywhere. Is this anyway to prepare your tax return? Of course not. Do you really need another source of stress in your life? File the extension and now imagine what you’ll be doing on April 18 while thousands of frantic taxpayers are stuck in traffic at their local post office; instead, you’ll be working in your garden or reading a good book, because you’ve got all summer to finish your return.
Reason #4: It’s easy.
As tax forms go, this is one of the easiest tax forms to complete. You put in your name, address and social security number – and you are already halfway done! Only four more lines to go: an estimate of your 2010 tax liability, the total amount of 2010 tax payments (from W-2 or 1099 withholdings and/or quarterly estimated tax payments), any balance due, and the amount you are paying with the form. A tax form can’t be any easier than that.
Reason #5: It’s fast.
You can e-file Form 4868. Talk about fast! You push the Enter button on your keyboard and the data gets transmitted to the IRS in a nanosecond. You’ll then receive an electronic confirmation from the IRS after the form has been processed and accepted. If you use a tax professional to prepare your return, he/she should be able to e-file the form for you, and since no signature is required on this form, getting it done quickly can take as little as a 5-minute phone call.
Filing an extension sounds too good to be true. What’s the downside? Read on!
Are There Any Pitfalls To Avoid When Filing An Extension?The nice thing about Form 4868 is that simply filing this form grants an automatic, no-questions-asked 6-month extension. You don’t have to have a reason. Just sending this form to the IRS on or before April 18 gets you the extra six months.
But here’s another important point about Form 4868: This 6-month extension is NOT an extension to pay any tax you may owe on the tax return. Form 4868 only grants an extension of time to file the tax return.
So, if you usually get a refund on your personal tax return, you are OK. But, if you think you might have a balance due, or if you are not sure, then you should go ahead and prepare the return to the best of your ability, do the calculations, and see where you stand.
If you are getting a refund, great. If you’re not in a hurry to get the refund, then file the extension form and wait until October 17 to send in the return. But if you have a balance due on the return, then you should send in your balance due with Form 4868. That way you avoid any penalty and interest for late payment of tax.
When October 17 rolls around, you send in the return, showing the Form 4868 payment as a credit. The end result is this: you paid your tax on time (April 18), and you filed your tax return legally late (October 17) because you filed the extension form on time.
Obviously, the key here is whether or not you have a balance due on your return. If you have a balance due, but don’t send in the payment with Form 4868, then you will have penalty and interest charges for paying the tax after April 18.
Bottom line: Do not overlook the fact that Form 4868 does not grant you an extension of time to pay the tax. It only gives you an extension of time to file the return.