Looming IRS Deadline May Not Come as Soon as You Think

brooke-lark-194254Most years the deadline to file your Federal income tax return is April 15th. This year you have a little extra time.

Since April 15th falls on a Saturday this year, you have until the following Monday to file your 2016 Federal Income tax return. However, this year Monday, April 17th, is a holiday known as Emancipation Day in the District of Colombia where the U.S. Department of Treasury is located.

So, you get an extra day. The deadline to file your 2016 Federal income tax return is Tuesday, April 18th.

If you are not ready to file your return by the 18th of April, you can file an extension giving you until October 16th to file your 2016 return. To do this you will need IRS form 4868. You can download a copy here.

Keep in mind even if you file an extension, your tax bill must still be paid by the 18th of April. The extension is an extension to file, not an extension to pay your taxes. To avoid a penalty for failing to pay your taxes you must pay at least 90% of your tax liability on or before the April 18th deadline.

Penalties can be steep

The penalty for failing to file your income tax return is more than the penalty for failing to pay your taxes on time. Failing to file your tax return on time (unless you have an extension) is 5% of your balance due per month. Failing to pay your taxes on time is 0.5% per month plus interest.

If you are running out of time and don’t think you will be able to meet the deadline, consider filing an extension. An extension gives you another six months to gather your information and file your return without penalties. It also helps you avoid the 5% per month penalty for failure to file a return.

Pay what you think you owe for taxes by April 18th. Then complete your return as soon as possible. Filing an extension doesn’t mean you must wait six months to file your return. In fact, you will save money by completing and filing your tax return as soon as you can. Doing so minimizes any penalties and interest you might owe for failure to pay your taxes on time, and allows you to receive any tax refund to which you may be entitled.