Monday, July 23, 2012

How Does An Irs Extension Work

Tax Extension Introduction


If you have waited until the last minute to file your taxes, or have encountered some sort of problem that will prevent you from filing before the April 15 deadline, you can submit Form 4868 to the IRS and receive an extension of 6 months. However, filing an extension with the IRS does not mean you also get an extension on paying your tax liability. Unless you submit a payment for your estimated tax liability, you may be hit hard by interest and penalty charges when you finally submit your documents.


Eligibility to File


All individual taxpayers who file a tax return are eligible to file for a tax extension with the IRS. Taxpayers interested in an extension must apply by filling out and submitting tax Form 4868 to the IRS. Businesses can also receive an extension by submitting tax Form 7004. Anyone traveling abroad, parties who are subject to estate tax and exempt organizations must file separate IRS extension forms.


Benefits, Interest, and Penalties


IRS tax extensions postpone the filing deadline to October 15, providing taxpayers with an additional six months to prepare and file their tax return documents. In cases where a tax liability is owed, interest will be charged on any liability amount not paid by the standard April 15 deadline. Late payment penalties are assessed on owed tax amounts not paid by the April deadline when the outstanding balance is greater than ten percent of the total obligation. Interest and penalties may be as much as 25 percent of the unpaid liability, which means taxpayers should attempt to submit an estimated tax liability payment before the April deadline whenever possible. Any refund owed to taxpayers who file after April 15 will be delayed.


Military Personnel


Anyone currently in the military who is serving in a combat zone at the time of the filing deadline will receive an automatic 180-day extension. Military personnel who are stationed outside the United States, but not serving in a combat zone at the time of the filing deadline, qualify for an automatic 2-month IRS extension. However, any tax liability due must be submitted to the IRS by the filing deadline.


Obtaining the Necessary Forms


Taxpayers who wish to file an extension may obtain the necessary form by downloading it directly from the official IRS website or by visiting a local IRS office. Forms can also be ordered by phone, but telephone orders may take up to 10 days to arrive, which is not suitable for those who wait until the last minute to file an extension. To place an order by phone, call (800) TAX-FORM. Taxpayers applying for an extension who are unable to pay the full amount of their tax liability in one lump sum may also arrange a payment agreement with the IRS online. Online applicants can opt to pay their expected amount through an electronic funds withdrawal. In order to pay in this manner, taxpayers must have their bank account and routing numbers available and must be able to provide the IRS with the adjusted gross income amount, or AGI, from the previous year's return.







Tags: April deadline, filing deadline, file extension, zone time filing, before April, before April deadline