Only a few days are left to file tax returns. If you believe you will not be able to file before the April 15th deadline, it is a very good idea to file for an extension. It will give you six more months to prepare and file your taxes. To file for an extension, the fastest method is to use the IRS’s Free File service. If you prefer using a paper form, you can file Form 4868 and send it to the IRS before April 15th. You can then have until October 15th, 2014 to file your tax return for 2013.
Anybody, irrespective of their income level or tax bill amount can use the IRS free tax-filing extension service to get an automatic six-month extension to file their tax return.
Late filing of taxes attracts a fee, which usually is 5 percent of the amount of taxes owed each month that it remains unpaid. The penalty can reach up to 25 percent of the taxes owed. To avoid penalties, you must file for an extension before the deadline. After the deadline, your tax bill will become tax debt, and the IRS will begin to charge penalties and interest on it.
Getting an extension to file does not mean an extension to pay taxes. The deadline to pay taxes is still April 15th and the IRS charges interest on unpaid taxes. The interest rate stands at three percent and is compounded every day. The IRS also charges a late-payment penalty, usually 0.5 percent per month.
You must file for an extension if you believe that you do not have the necessary documents you require to complete your tax return. It is better to use an extension than to file an incomplete or an erroneous tax return. If you know you owe taxes, but still need time to prepare your return, it is best to pay an estimate of the amount, so that you avoid interest and the late payment penalty.
Certain taxpayers due to their unique circumstances automatically get an extension to file without having to file Form 4868. They include taxpayers living abroad, the military and other servicemen serving in combat zones, and those affected by recent natural disasters.