If you can't make Monday's tax deadline, file an extension but know what it means
PITTSBURGH (KDKA) - The tax deadline for filing your taxes is usually April 15, but because that date is a holiday in Washington, D.C., Emancipation Day, the deadline for filing your income taxes has been moved to Monday, April 18.
If that extra weekend to do your taxes doesn't help, you might consider filing for an extension, but you need to understand what that means.
If you haven't filed your federal or state tax returns yet, you are hardly alone.
"There's about 60 million people that have to take care of this since Friday a week ago," says Mark Steber, the chief tax information officer for Jackson Hewitt.
One of those 60 million is professor Bryan Menk, a tax professor at Duquesne University.
"Paying money before it's due to the government is not something I would recommend to any of my clients. In fact, I haven't paid my taxes yet this year, and I do owe money, and I'll be paying it on Monday," he says.
While most will file their returns on time, Steber says millions will seek the six-month extension to file their returns, citing last year's numbers.
"About 11.5 million people filed extension forms. Now that's the people who took the time to file the form and do it properly. There's another fair share of people who throw caution to the wind and don't file anything," says Steber.
To extend, both Steber and Menk say taxpayers must file IRS Form 4868 by Monday, but the extension is only for the paperwork. You still must pay any tax dollars due by Monday or risk paying interest and penalties.
"It's not really a true tax extension," says Menk. "It's an extension of time to file the return. But your liability – the money that you owe – is actually due April 18 regardless of whether you file a tax return or not."
In other words, if you will ultimately owe the government money – and one out of four taxpayers will – you must send a check to cover what's due along with your request for an extension of time.
"It's not an extension of time to pay," notes Steber. "So you kind of have to work up the numbers for your tax return to make sure you don't owe, and if you do owe, you pay the balance in with the extension or you run the risk of a failure to pay penalty."
"And if you owe money and you don't pay it on April 18, they will fine you," says Menk.
There are actually two penalties – one for not filing your return on time or not asking for an extension on IRS Form 4868 – and another penalty for not paying the taxes owed.
What if you are short the cash? First, don't ignore the paperwork required on Monday, says Steber.
"Send in an extension or send in your tax return even if you don't plan to pay or can't pay. That will stop a penalty that will be ten times bigger than the failure to pay penalty," he says.
The tax experts say if you don't have the cash to pay your taxes, put it on a credit card or, better still, use the low-interest installment plan with the IRS.
"An installment arrangement can be made for the tax balance due at a very low interest rate because they're on the federal rate, less than four percent a year, very low charge and, in fact, free for low-income taxpayers," says Steber.
Here's the bottom line for all taxpayers: Don't ignore Monday's tax deadline.
File your tax return with any money owed – or, if you can't do that, file for an extension but send in the taxes you think due at the same time – or, if you are short on cash, at least file the return or extension, and then ask the IRS about getting on the installment payment plan.