If you won’t have your federal (and state) tax returns ready by the end of the day on Wednesday (April 15), it’s probably time to join the millions of taxpayers asking for an extension.
The extension adds another six months to the deadline, making it Oct. 15. The IRS won’t ask you why you need it. BUT – and it can be a big “but” – the IRS still expects you to estimate income and pay any taxes by the normal deadline.
You accomplish that on Form 4868 or “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.” The extension generally is automatic. For a copy, see http://www.irs.gov/pub/irs-pdf/f4868.pdf.
The clock is ticking with this. Whether you’re sending it electronically or by “snail mail,” it must be recorded or postmarked by the end of the day on April 15 to avoid penalties.
Now, from a technical standpoint, if you are absolutely certain that you will not owe any income taxes, you don’t need to file Form 4868. You can file your normal 1040 return later in order to capture your refund.
However, to be safe, we at EricJohn Ltd. advise filing the application for extension, whether or not you think you need it. Miscalculations can happen, and there is a late filing penalty in addition to late payment penalties for any unpaid tax.
WHAT THE IRS WANTS
In a nutshell, an extension is not valid unless your tax liability is estimated properly, using available information. Don’t break out in a sweat just yet! You can come up with a reasonable estimate. As a starting point, did you make more or less money than a year ago?
If you have some figures, work with that information, even if you are missing some income or expenses. Then make a good faith estimate of what you owe. Spending the time to pull together realistic figures could save you hundreds – maybe even thousands – in tax penalties.
Next, send a tax payment based on your estimate! You can do that electronically at the IRS web site (www.irs.gov) or enclose a check in the envelope. But don’t omit that step, even if your estimate is shaky.
Finally, don’t forget any state taxes you owe. In Minnesota, you don’t have to file an extension form. BUT – just as with the federal return – you must pay tax due to avoid penalties.
Minnesota Department of Revenue also accepts tax payments through its Web site. Here’s a pointer about extensions and payments: http://www.revenue.state.mn.us/individuals/individ_income/Pages/Filing_Extensions.aspx.
We at EricJohn Ltd. wish you easy and accurate filings for Tax Day!