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
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.