Everyone knows that you must file your tax returns by April 15th. Right? Well, that is not totally accurate. It is true that the traditional filing due date of your Federal, Pennsylvania, and Local income tax returns is April 15th, but that filing due date can be extended to October 15th with not much more effort on your, or your CPAís part, than the wave of a magic wand.
If you need more time to file your 2012 income tax returns, you can do so just by filing an extension with the Internal Revenue Service. And you donít even need to have a good reason. In fact, you donít need any reason. And you donít even have to pay what you are going to owe in order to obtain the extension. The form number is Form 4868, and can easily be obtained from the IRSí website (www.irs.gov). To complete the form, just fill in your name, address, social security number, and a few particulars regarding your estimated taxes for the year (more on this below). Send the Form 4868 to the IRS before April 15th, but be cautioned, donít wait until the last day. If you are tech oriented, you can even do this through the IRSí website or through your retail software vendor.
To file an extension, you will need to have at least a rough idea of your 2012 income tax responsibilities. A good quick reference would be your 2011 income tax return. If you income and deductions would be about the same you can use your 2011 tax liability as an estimate of your 2012 tax liability. Ditto for the tax payments for 2012. You donít need to hit the bullseye; barn door estimates will do. But if in doubt, overestimate what you think you may owe. Lastly, if you think you will owe more taxes, you need to decide how much you will pay with the extension. Although remember that you donít have to pay anything with the extension (but see belowÖÖ)
Now for the small print. An extension is an extension of time to FILE your income tax return; not an extension of time to PAY your income taxes. If you calculated you will not owe any additional taxes, just file the extension. If you know you will owe additional taxes for 2012, youíd be wise to pay the tax with the extension when you file it. Without getting into the finer details, if you owe tax and donít pay it with the extension on or before April 15th, you will be charged interest, and possibly penalties for failure to pay the tax on time.
A lot of people use extensions because they just can not accumulate their tax data by April 15th. Some use the extensions as a means of prolonging the inevitable, knowing they are going to have to pay the interest and penalty.
Lastly, the Federal extension is accepted by the State and local authorities. But keep in mind, if you owe additional tax to the State or Local revenue offices, they too will charge the interest and penalty for late payment of the tax.
Disclaimer Ė Bruce Baer is a CPA with Baer and Company CPAs, which advertises with Journal Register Co. publications.
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