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Feeling Tax Day Stress? Knowing Your Tax Extension Options can Provide Relief.
If you are like the thousands of Americans who will owe taxes or are having difficulty finalizing your taxes this month, it is important to understand your options when filing by the close of tax season. You are not alone. The good news is that the Internal Revenue Service provides a fair extension policy for individual taxpayers and partnerships who apply for the automatic extension by April 18.
“Many people are not aware of the extent of their options as they prepare for the end of tax season,” said John Kasperek, Jr., of John Kasperek Co., Inc. in Calumet City, Illinois. “The IRS offers automatic extensions for up to six months [October 17] and there are several easy ways to request an extension of time to file a U.S. income tax return.”
Unfortunately, even with an extension you will still owe interest on any tax not paid by the regular due date. The late payment penalty is usually ½ of 1% of any tax (other than estimated tax) not paid by April 18, 2016. There are also late filing penalties, usually of 5%. Penalties are charged for each month or part of a month the tax is unpaid. These penalties will not be charged if you can show reasonable cause for not paying on time (attach a statement to your return fully explaining the reason to your Form 4868).
“The key to the automatic extension is creating the best possible estimate of your tax liability based on the information you have and considering previous years, and then making whatever payment you can,” said Kasperek. “Once you apply for the automatic extension, you can file your tax return any time before the extension expires–the sooner the better for your penalties.”
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