The Daily Deduction

With the Deadline So Close, Look to Efile

If you’re one of the last minute tax filers, rest easy! You can efile online from the comfort of your home or office.

If there’s no possible way you’ll make the tax deadline, as a last resort you can go into an office and file for an extension by April 15.

Filing an extension pushes back the tax filing deadline to October 15. It also protects you from the failure to file penalty which can grow at a rate of 5 percent of the amount due with your return for each month that you’re late, up to five months. For example, if you owe $5,000 and are three months late, the late-filing penalty would be $750.

It is exceptionally important to note that filing an extension is simply an extension of time to file your paperwork, not an extension to pay any taxes owed. If you owe money for the 2013 tax year, you will still be responsible for paying your estimated tax liability by April 15 to avoid paying interest and penalties on the amount owed.

Filing an extension does not stop you from incurring interest and paying a late payment penalty. You will incur interest at a rate determined quarterly based on the federal short-term rate, plus 3% compounded daily even if you do file an extension, which is why filing for an extension should not be thought of as a way to delay tax payments.  You will also have to pay a late payment penalty, calculated by a percentage of tax owed times number of months late starting from April 15.

Even if you are unable to pay your tax liability in full, pay as much as you can with your tax return. You can even apply for an online payment agreement or Installment Agreement Request when you submit your tax return.

eSmart Tax makes it easy for you to finish filing your taxes, but if you need more time, you can file your extension with your local Liberty Tax Service office.


 

Posted To: The Daily Deduction By: Lauryn on 4/13/2014 03:00:00 AM
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