If you are one of those chronic procrastinators who has yet to close out the 2011 tax season, don’t waste time reading all of this. Just file an extension asap. If you think you’ll owe money, send a check along with it.
And what if you’re reading this after the April 18 deadline has passed? Go directly to your post office and mail an extension form right now. It couldn’t hurt.
That’s because (1) filing the extension on time will protect you from the burdensome “failure to file” penalties the Internal Revenue Service heaps on scofflaws. And (2), the IRS uses machines to open all of the mailed forms, and I’m just guessing that those machines don’t actually read the postmarks on the forms. So while an IRS spokeswoman would not confirm or deny my assumption, only emphasizing that you are required to file by April 18 at midnight, I think there’s a good chance that if your form arrived in the middle of this week’s giant pile of envelopes, nobody would notice that you slipped it into the mail slot on Tuesday instead of Monday.
Filing that extension gives you time and saves you money. You’ll have until October 17 to file your return. Perhaps more importantly, there are severe penalties for not filing your taxes on time. Late filing penalties run five percent of unpaid taxes for each month or partial month that your return (or extension form) is late. If your forms are more than 60 days late, your penalty is the lesser of $135 or 100 percent of your unpaid tax. (And that penalty doesn’t satisfy your tax bill, it’s on top of it.)
That’s far worse than the penalties you’ll face for simply not paying your taxes on time. If you don’t pay all that you owe by this year’s deadline--regardless of whether you’ve filed a tax form or an extension request --you’ll owe a failure-to-pay penalty of one-half of one percent on unpaid taxes for each month or part of a month after the due date that the taxes are not paid tax.
So get those forms in. And if, even after reading this, you still can’t do it, try to find a good reason. The IRS is going out of its way to work with taxpayers this year. It put out a statement on April 14 saying, “You will not have to pay a failure-to-file or failure-to-pay penalty if you can show that you failed to file or pay on time because of reasonable cause and not because of willful neglect.”