The April 15 tax-filing deadline is quickly approaching. Are you ready?
Various extenuating circumstances can prevent people from completing their taxes on time, such as being out of the country. But let’s face it: sometimes people simply forget about them until the last minute.
If you find yourself in this situation, don’t panic; you can simply request an automatic six-month extension through the Free File link on IRS.gov.
This free service only takes only a few moments to complete, and you are qualified to use it regardless of your income status. All you need to do is electronically request an extension on IRS Form 4868, after which you’ll receive a new window of time—until Oct. 15—to file your 2014 tax return.
Important note: Requesting an extension will provide you with extra time to file your tax return, but it will not allow more time to pay any taxes owed. Before receiving an extension, be sure to estimate the taxes you owe and pay that amount to the IRS.
Exception to the extension rule
If, on the regular due date of your tax return, you are out of the country and a U.S. citizen or resident, you are automatically allowed two extra months to file your return and pay any amount due without requesting an extension.
Interest will still be charged, however, on payments made to the IRS after the regular due date, without regard to the extension.
Be advised the deadline for making your 2014 IRA contribution is also April 15. Unfortunately, a tax file extension does not also extend your IRA contribution deadline.
Exceptions to the IRA rule
If you are a member of the military and served in a combat zone, you may be granted additional time to contribute to your IRA for 2014. For example, if you served in a combat zone between Jan. 1 and April 15, you have a minimum of 180 days after you left that area to make an IRA contribution. Refer to IRS Publication 3, Armed Forces Tax Guide, for more information.
Your IRA contribution is eligible as long as it’s postmarked by April 15, even if it’s received after that date by the IRA. The postmark can be from the U.S. Postal Service, or other private delivery service companies, such as Federal Express and United Parcel Service. See the instructions to IRS Form 1040, which tells you which private delivery service company postmarks qualify.
Late Filing Penalty
If your taxes are filed after the due date (including extensions), then you will most likely be charged a late filing penalty by the IRS.
The penalty is usually 5% of the amount due for each month or part of a month your return is late. The maximum penalty is 25%. If your return is more than 60 days late, the minimum penalty is $135 or the balance of the tax due on your return, whichever is smaller.
You might not owe the penalty if you have a reasonable explanation for filing late, however. Attach a statement to your return fully explaining your circumstances.
The Bottom Line: April 15 will be here before you know it. Don’t another day to devote appropriate attention to your taxes. You’ll rest easier once they are completed, or an extension is filed.