Know your options, and take advantage of the tax code. If finalizing your taxes next month expects to be another painful experience (financially, organizationally, or even physically), consider your options early. The Internal Revenue Service provides a fair extension policy for individual taxpayers and partnerships who apply for the automatic extension by Tuesday, April 18, 2017.
That’s right, TUESDAY. So, let’s start there. You may have thought it odd (or may not even have realized) that last year’s tax deadline was Monday, April 17, 2016. Although Tax Day is traditionally on April 15th, if it falls on a weekend the tax deadline is pushed to the following Monday. This year, because Monday, April 17th is Emancipation Day, you have until Tuesday, April 18th to get your taxes done.
While filing an automatic extension is a relatively painless process (more on this later), there are several good reasons to get your taxes in early. These may include reducing exposure to tax fraud, getting money in hand sooner to pay your debts, or giving yourself time to pay your tax debt. Yes, filing early doesn’t necessarily mean paying early. You may file your taxes early and gain certainty about your tax liability and still wait to pay by the April 18th deadline.
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, 2017. 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).
Please keep in mind, as with almost every rule there are exceptions and limitations and John Kasperek Co., Inc. strongly recommends you consult a tax professional to best determine how the law affects your unique situation. Best of luck this tax season!