Can’t file taxes by April 15? You don’t have to…
The IRS will grant an automatic extension to anyone who asks. But you still have to estimate what you owe and send the money.
This post is by Laura Saunders of The Wall Street Journal.
For taxpayers who can’t manage the April 15 deadline, the Internal Revenue Service offers an automatic six-month filing extension. This year the due date is Oct. 15, and taxpayers qualify by filing Form 4868.
Getting an extension is preferable to filing a return with mistakes, says Melissa Labant, a tax specialist with the American Institute of CPAs. “If you have already filed, then you will need to amend the return, which is often more trouble,” she says.
Remember that an extension to file isn’t an extension to pay. Uncle Sam wants 100% of the total tax by the April due date, or interest and perhaps a late-payment penalty will be due.
Here are common reasons to seek an extension.
Incomplete records, especially for investments or a closely held business. A sore point with many tax preparers is that brokers sometimes issue multiple Form 1099s reporting investment tax information.
Lack of a letter confirming a charitable contribution. The law is clear: Taxpayers must have proper notification from a charity before deducting a donation. “Get that letter before you file,” Labant says.
Roth IRA reversal. Taxpayers who converted all or part of a regular IRA to a Roth account have until the October due date the following year to undo the conversion, which is taxable. That might be a good idea if assets in the Roth account have fallen in value since the conversion.
Roth IRA owners who file in April can amend their returns before Oct. 15 to undo last year’s conversion, but filing for an extension is often the easier route.
You are traveling, or it is your busy season. Harried tax preparers often file extensions for their own returns.