Tax season tips: How to file for an extension

By Personal FinanceFOXBusiness

34% of voters believe the rich are not paying enough in taxes: Fox News Poll

FBN’s Susan Li, Kaltbaum Capital Management President Gary Kaltbaum, Capitalist Pig Hedge Fund manager Jonathan Hoenig and Layfield Report CEO John Layfield on a new Fox News Poll, which shows that 34 percent of voters believe that the rich aren’t paying enough in taxes.

The April 15 tax deadline is upon us, which means if you haven’t filed your documents or for an extension, time is running out.

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The IRS has cautioned people against panicking because there are a number of quick and easy ways to file for an extension if you know you will be unable to meet the deadline.

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By filing for an extension, a taxpayer will have an additional six months to prepare and file his or her paperwork – until Oct. 15.

There are multiple ways taxpayers can request an extension, including using Free File or by using Form 4868. If you are mailing your form, it should be postmarked by the tax deadline. For businesses, there are different forms that may apply.

Payers can also get an automatic extension when they pay all or part of their taxes electronically by April 15 when using IRS Direct Pay, the Electronic Federal Tax Payment System or by credit or debit card and selecting Form 4868 as the payment type.

Don’t forget filing for an extension does not mean you don’t have to pay. The IRS still expects people who file for an extension to pay an estimate of taxes owed by the deadline – or face penalties and interest.

If you don’t file your return at all, the penalty is 5 percent of the unpaid taxes for each month that a return is late. The penalty begins accruing the day after returns are due – up to a maximum of 25 percent of your unpaid taxes.

If you fail to pay your taxes by April 15, the penalty is 0.5 percent of the taxes not paid. The penalty is weighed each month after the due date until the bill is paid or the levy reaches 25 percent of unpaid taxes.

The failure to file penalty is reduced by the failure to pay penalty during a month where both penalties apply – the maximum penalty you’ll pay for both in any given month is 5 percent.

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If the IRS thinks the amount you have estimated that you owe is unreasonable, you could also be subject to interest on what you failed to pay. If you do not owe any taxes, an extension will simply give you more time to submit your paperwork.

Depending on your state of residence, filing for an extension for some state returns may require additional steps.