We are nearing the tax deadline of April 15! Some of you have already filed and received your refund, while others have delayed filing, perhaps because you anticipate owing taxes to the IRS. You are not alone. According to a polling survey conducted by CivicScience, approximately 43 percent of Americans expect to owe the IRS this year. One main reason for owing taxes is not having enough deducted throughout the year to cover your tax bill for taxable income. One solution is to complete a new W-4 form to adjust the amount deducted to cover your tax responsibility. This form can be obtained from your employer’s human resources office.
However, for those who have waited until the last minute to file their tax returns, filing for an extension has its pros and cons. Let’s explore them.
Pros:
A taxpayer needing more time to file taxes can easily request a tax filing extension, providing an additional six months to file the return. However, the IRS still expects timely payment.
The IRS Form 4868 is the application for an automatic extension of time to file a U.S. individual income tax return. This form can be downloaded and printed directly from the IRS website (www.irs.gov) and must be mailed to the IRS by April 15. This extends the filing deadline to October 15, 2024, but the extension form must be filed before the current year’s tax filing due date.
Filing an extension allows time to gather all necessary information. If you lack receipts or await your W-2, the extension grants time to obtain these documents.
Submitting your tax return by the October 15 deadline after filing an extension can help avoid the late filing penalty, which is 5 percent of unpaid taxes per month after the due date.
Cons:
Payment is still due on April 15 even with an extension. If you owe the IRS but can’t pay immediately, filing an extension doesn’t grant extra time for payment and may result in penalties and interest.
Procrastination complicates filing. Organizational tools like tax software and checklists are helpful for a stress-free filing experience.
Extending the deadline delays receiving any potential refunduntil after submitting your tax return.
Errors in the extension application, such as misspellings or outdated information, can lead to rejection by the IRS.
Filing an extension only extends the time to file, not the time to pay taxes. Failure to pay taxes owed may result in IRS penalties, making it crucial to file accurately and on time, as you’re able.
Charlestien Harris is our financial contributor. She is a financial expert with Southern Bancorp Community Partners whose articles are seen in a number of publications around the region.
