What to Know About Tax Filing Extensions

The U.S. Individual Income Tax deadline is typically April 15th, unless the 15th falls on a weekend or Federal holiday.  If you need additional time to file, you can complete Form 4868 for an automatic six-month extension.  This is not an extension of time to pay!

If the April 15th deadline rolls around and you don’t pay the full balance by the 15th, you’ll be hit with the failure-to-pay penalty of ½ of 1 percent of your unpaid taxes. This is a monthly penalty that starts accruing April 16th and continues until the balance is paid. 

Another often overlooked penalty is the Penalty for Underpayment of Estimated Tax.  This is especially important for self-employed individuals and contractors who receive 1099s and do not have taxes withheld.  The IRS requires you to make estimated payments during the year and will hit you with a penalty if your tax balance is over $1,000 after subtracting withholding and estimated payments.  If you are unable to pay the balance, you may want to set up an Installment Agreement (monthly payment plan) with the IRS.

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