The Ticking Clock Is About to Ring: Time to File Your 2017 Tax Extension

NOW is the time to make that honest assessment: will I be able to file my individual income tax return by April 17? If not, no shame exists to filing an automatic extension.So if you need more time to assemble your data or track down missing tax documents, file IRS tax extension Form 4868 by mail or electronically by April 17. (Electronic filing includes a receipt acknowledgement from the IRS.)Keep in mind an extension only pushes back the due date for filing your tax documents, not for paying owed taxes. If you believe you owe money for the year, you must estimate the amount and pay it by the April deadline to avoid penalty and interest charges. You’ll then gain six more months, until October 15, 2018, to file your completed return.If you need to pay owed taxes, you can pay by credit card either via electronic payment online or by calling the IRS directly. Consider these guidelines if you file an extension:

• If the IRS thinks your estimated owed tax is unreasonable, it may disallow your extension and assess a late filing penalty.
• If you underestimate the amount of taxes owed, you’ll owe interest on whatever amount you fail to pay by the April 17^th
• If you pay less than 90% of your estimated owed taxes, you’ll end up paying a penalty of 0.5% of the underpayment every month until you pay the remaining balance. For example, if you pay $600 by April 17^th, but discover after completing your return that you really owe $1000, you’ll owe 0.5% per month on the overdue amount of $400 – about $2 a month – until the entire amount is paid in full.

Taxpayers often worry about an audit when filing for a tax extension, but they shouldn’t according to the IRS:

“Filing a tax extension does not increase your chance of an audit. Conversely, not filing a tax extension and instead filing a hurried tax return [with mistakes] can increase your chance of an audit.”

So if that honest assessment screams you need more time, relax and take it. Estimate your tax and pay what you owe by April 17 and send it in with your extension. Of course, if Uncle Sam actually owes you money, your refund will be delayed until the IRS receives your tax return—so you’ve got some incentive not to wait the full six months!Need assistance completing an accurate extension for your 2017 income tax return? Contact the experienced tax accountant team at Patrick & Raines CPAs for help: Office@CPAsite.com or 904-396-5400.