Everyone starts getting a little freaked out this time of year because of personal income tax reporting and paying obligations due on April 15th. I have found through the years that this kind of pressure causes people in all walks of life to make poor judgments and less than fully informed decisions just to hit a deadline.
The point of this post is to inform you that it is okay to file an application for a 6 month automatic extension of time to file your US individual income tax return and to NOT WORRY IF YOU ARE BEHIND THE CURVE THIS YEAR. There are many reasons why you may need an extension of time to file your taxes that are all fully legitimate including:
1. life changing events
2. partnerships or other pass through entities and trusts that are not prepared to report and even
3. lack of personal organization.
It is all okay. To file an extension request all you need to do is fill out and submit IRS Form 4868 and provide:
1. Your name and spouse’s name (if you’re filing jointly) and address;
2.Your Social Security number and spouse’s Social Security number (if you’re filing jointly);
3. An estimate of total tax liability for 2013;
4. Total of what you have already paid in 2013 (including withholding and estimated payments); and
5. The amount you’re paying with the extension, if anything.
Remember that an extension of the time to file is simply that. It is not an extension of time to pay as INCOME TAX PAYMENTS ARE DUE IN FULL ON APRIL 15TH.
What this means is if you think you might owe taxes and you’re filing for extension, you should make a payment with your extension request simply to avoid interest and penalty assessments later. The interest rate is currently 3% per year, compounded daily, and the late-payment penalty is normally 0.5% per month. In other words you should estimate what the taxes due are and if you over estimate rest assured you will be entitled to a tax refund.
This is super easy to do if you just take a minute to gather your thoughts and honestly estimate your liability. Once you’ve done this you can either mail in IRS Form 4868 with an estimated payment taking care to post mark the envelope by April 15th; use the IRS’ free file service or contact me and I’ll have one of my trusted lieutenants walk you through it or take care of this for you as you see fit.
