The deadline for filing federal taxes is approaching fast, and if you find yourself needing more time to get your documents in order, filing a tax extension might be the best solution for you. According to experts, this season, a significant number of Americans are not feeling prepared to file their taxes, with many admitting to procrastinating the process. Filing for a federal tax extension can be a quick and easy process that only takes a few minutes of your time. It can provide you with an additional six months to gather all the necessary information and complete your return accurately.
Failure to file for a tax extension can result in penalties and interest on any taxes that remain unpaid after the deadline. The failure to file penalty is significant, worth 5% of your unpaid taxes per month or partial month, capped at 25%. However, it is essential to note that an extension to file does not mean an extension to pay. Taxes owed are still due by the original deadline, even if you have filed for an extension. To minimize penalties and interest, it is advisable to pay at least the safe harbor amount, which is typically 100% of the previous year’s taxes. This amount increases to 110% if your prior year’s adjusted gross income was $150,000 or more.
Fortunately, there are several free options available to file a federal tax extension. One common method is to complete Form 4868 and mail it to the IRS. However, experts recommend opting for digital options whenever feasible to expedite the process. Sending information digitally to the IRS is more efficient than traditional mail, as it can take a considerable amount of time and may not always be reliable. Additionally, choosing the “extension” option when making your estimated tax payment for the current year can automatically process your extension without requiring an additional form submission. This method provides immediate confirmation of your extension submission, although it is still advisable to double-check the transaction in your IRS online account for accuracy.
Filing a federal tax extension can be a useful tool for individuals who need more time to complete their tax returns accurately. By understanding the implications of not filing an extension and exploring the various options available, taxpayers can effectively navigate the tax filing process and avoid unnecessary penalties and interest. It is crucial to be proactive and take advantage of the resources and guidance provided by financial experts to ensure a smooth and successful tax extension filing experience.