Will I be penalized for filing a tax extension?
If you’re filing an IRS tax extension form you may wonder if you’re going to incur fees or get hit with a penalty. You’d rather not have to pay more than you need to. You probably also figure that if you’re going to tell the IRS you need more time with an IRS tax extension form that you shouldn’t get hit with fees. However, you may be in for a surprise.
If Expecting a Refund Are you most likely expecting a refund? Congrats, you will have no problems filing an IRS tax extension form. The IRS will gladly hold on to your tax refund while you finish up your forms and get your ducks in a row. There will be no fees associated when sending in an IRS tax extension form if you’re expecting a refund. Simply finish the form, known as the Form 4868, before the April 17th deadline. Now you just have to finish your taxes at the speed you prefer. Of course, they need to be in before your 6 month tax extension is up.
If Expecting to Pay Are you instead looking to owe the IRS money? Now you may in for some trouble. While the IRS doesn’t pay you interest while they hold on to your tax refund, they will charge you interest if you owe them money. Even if you get your IRS tax extension form in on time they will still charge you extra. The IRS tax extension form extends the time you can file your taxes. However, a tax extension does not extend the time you have to pay any taxes due. So just because you are filing an extension does not mean you aren't on the hook to pay by the April 17th deadline. It’s a strange rule and doesn’t really make that much sense. However, it’s the rules! To avoid any fees, you should send in payments to the IRS along with your IRS tax extension form. Determining exactly how much you owe might be difficult as you haven’t completed your tax forms yet, though. There are programs out there that can help you calculate this. Instead of doing all that work yourself, though, you might consider using a tax extension service like FileLater.