Many people consider getting an income tax extension without realizing what it will and will not do for them. To clarify the biggest misconception, it should be understood that the IRS does not generally afford people the liberty to satisfy tax debts at their convenience. If you owe the IRS, you should make every effort to settle your debt on time. There are some special circumstances that may qualify you to delay your payment date but you need to know the rules.
General Extensions
An income tax extension is generally designed for people who cannot file their taxes on time. In this sense, “filing” refers to completing and submitting the necessary paperwork. The IRS is very clear in warning that extensions to file are not automatically extensions to pay. Therefore, if an individual believes that he owes taxes but is unable to file, he is advised to remit payment by the due date and complete Form 4868 to apply for the opportunity to file late.
Payment Extensions
There are certain situations that may permit you to pay your income taxes late. If you are living outside of the US and your main place of business is outside of the US when taxes are due, you can receive an automatic two month extension for filing and paying your taxes. The same opportunities are granted to soldiers serving outside of the US at the end of the tax year.
When you finally file your taxes and submit any necessary payments, a statement must be included explaining how you qualified for the extension.
Extending an Extension
If you took advantage of your automatic two month extension to file and to pay and you still are not prepared to file, it is possible to put it off for another four months. Understand, however, that this additional time only applies to filing. You must pay your taxes by the end of the two month extension. If you are unable to pay the full amount, the IRS advises that you pay a portion, and upon recognition of your attempt, they will charge you interest on the unpaid balance.
Get Legal Advice
Income tax extensions are often more complicated than filling out a form. There can be numerous stipulations involved and errors can be costly. If you foresee an inability to file or to pay your taxes by the due date, it is highly advisable to contact an experienced tax attorney and get professional advice.
