If you can’t complete your 2011 federal tax return by the April 17, 2012 deadline, you can buy yourself more time. (The normal April 15 deadline is pushed back this year due to a holiday weekend.) Just file an extension to push the deadline back six months to October 15, 2012 and avoid IRS late-filing penalties.

The extension is not automatic.  You must initiate and file the extension with the IRS and your state, if applicable. There’s a catch, though. The extension only pushes back the due date for the paperwork. If you owe money, you need to estimate the amount, then file your extension and make your payment by April 17, 2012.  At a minimum, you should pay in 100% of your 2010 tax liability.

1. EFile your tax extension online in using the IRS Free File website.  You will need your name, address, filing status, date of birth, social security number and your adjusted gross income from your 2010 tax return (if filed; otherwise enter “zero”) for both you and your spouse, if married.  I recommend the TaxAct program.

2. Print the IRS extension form, fill it out by hand, and mail it to the IRS Refer to the irs website http://www.irs.gov for the Form 4868. Print the form and instructions. Fill out the form and send it to the IRS address for your state. If you think you owe federal taxes, include your payment – or a partial payment if you can –  with your Form 4868 and mail it—postmarked by April 17, 2012.

Even if you cannot make a payment, send in the extension anyway with all “zeros” so as to avoid the failure to file (FTF) penalty.  If you don’t make a payment for the taxes due, you may be liable for underpayment penalties and interest, even if you’ve filed for an extension.

Need to use a credit card to pay taxes owed? If you’ve efiled or mailed Form 4868 and need to pay by credit card, you can use one of several IRS approved payment methods.  Refer to their website. You can pay with your credit card online or by phone.  Your approved extension will allow you to file your complete return by October 15, 2012.

• If the IRS thinks your estimate of the amount of tax you owe is unreasonable, it may disallow your extension and assess a late-filing penalty.
• If you underestimate the amount of tax you owe, you’ll have to pay interest on whatever amount you fail to pay by April 17.
• If you pay less than 90 percent of the tax you owe, you’ll end up owing a penalty of 0.5 percent of the underpayment every month until you pay the balance. For example, if you pay $600 on April 17, but discover when you complete your return that you really owe $1,000, you will owe 0.5 percent per month on the $400 that is overdue, or about $2 a month, until you pay the balance in full.

State tax extension guidelines vary.  To see detailed information about state extension filing deadlines and mailing addresses, select your state of interest from this website. 

Please call or email for more information.