Tax deadline looms: Should you file for an extension?
The bell for the April 17 tax return deadline tolls for thee.
But don’t panic, says University of Missouri Extension personal financial planning specialist Andrew Zumwalt. Income tax extensions are easy to file and give filers some breathing room. You can get an automatic six-month extension of time to file from the Internal Revenue Service.
To do so, you must file Form 4868, “Application for Automatic Extension of Time To File U.S. Individual Income Tax Return,” by April 17.
An extension to file is not an extension to pay, Zumwalt says. Interest and other fees may accrue during your extension period. If you cannot pay any or all of the amount owed, you can request a 60- to 120-day extension of payment. If you need more than 120 days, you can set up an installment agreement.
Whatever you decide to do, don’t ignore the situation. “The worst thing you can do is put your head in the sand,” Zumwalt says. Don’t ignore the need to file or the need to pay. If you get mail from the IRS, open it and act upon it immediately.
If you end up owing a large amount to the IRS, consider a review of your W-4 withholding amount. Do this in April or May to allow plenty of time to have enough money withheld to avoid this situation next tax season.
If you file an extension and are entitled to a refund, finish the process so you can get your cash in hand. The IRS does not pay interest on the amount it owes you, so you don’t want that money sitting around not drawing interest.
Volunteer Income Tax Assistance and Tax Counseling for the Elderly sites are still open in some locations in Missouri. They can help taxpayers with extension filing.
Even if you miss the April 17 deadline completely, do file your taxes, Zumwalt says. There are three main reasons to file a tax return even if you may not owe money. First, you might get a refund based upon a deduction you did not know about. Second, filing might prevent an IRS audit because the statute of limitation begins at time of filing. Third, you might discover that someone is using your identity.
For more information, go to www.irs.gov/uac/Extension-of-Time-To-File-Your-Tax-Return. For information and resources on personal finance, visit the MU Office of Financial Success website at www.ofsmizzou.org, or contact the office at 573-882-2173 or firstname.lastname@example.org.
Source: Andrew Zumwalt, 573-884-1690