If you need more time to file your taxes after this crazy past year and plan to file an extension, make sure you do so by the May 17 deadline or you will receive a late filing penalty.
Lisa Greene-Lewis, CPA and TurboTax (INTU) - Get Report expert, also explains that you will not receive a penalty for filing an extension, but you will receive a penalty if you don't pay what you owe. It's important that you pay the bill because there's not an extension to pay, and it's also important to file the extension on time because the failure to file penalty is greater than the failure to pay penalty.
Everything you need to know about filing an extension:
- You must fill out form 4868, but you can e-file it as an easier option so that it's sent directly to the IRS electronically instead of mailing.
- The filed extension pushes the deadline from May 17 to Oct. 15.
- You need to put in some information so you know what taxes you owe or if you're going to get a refund. There's no penalty if you're going to get a refund, but if you owe money then you'll need to know that because the IRS wants you to pay at least 90% of what you owe to avoid receiving a penalty. It's not a total freebie.
- Some states accept the federal extension and some states don't, so it is on a state-by-state basis. Some states require you to fill out an extension for the state as well. Make sure to find out exactly what your specific state rules are for filing extensions.
If you're going to file an extension, just make sure you do so by May 17 to avoid late filing penalties, know how much you owe or will be refunded, and make any necessary payments to avoid payment penalties.