Spring is here, the flowers are blooming, the birds are singing, the Flyers will probably miss the playoffs again and………your taxes are due!
If you haven’t already taken care of your unalienable right to support our government, you need to get cracking! The federal individual tax filing deadline is only weeks away. But this year, fortunately or unfortunately depending on your point of view, you have a few extra days to file. Instead of the normal dreaded April 15th, this year your federal individual tax return is not due until April 18th. So sit back and relax!
Why April 18th? Since this year April 15th falls on a Saturday, the filing due date deadline gets pushed ahead to the following Monday which is April 17th. Well that didn’t answer the question of why April 18th did it. Ahh yes, let’s not forget the most revered and celebrated of all holidays, Washington DC Emancipation Day! The shelves at your local Hallmark store are brimming over with Happy Washington DC Emancipation Day greeting cards. So, when is Washington DC Emancipation Day celebrated? On April 16th of course. But, since April 16th is a Sunday, this year Washington DC Emancipation Day will be celebrated on Monday, April 17th, thus pushing the tax return filing deadline ahead to April 18th. While we are at it, let’s get really convoluted. If you live in Massachusetts or Maine your federal individual income tax return filing due date is not due until April 19th! You can figure that one out! Now, what was the question again?
But procrastinators do not despair, you need not fear April 18th. Why? Because those swell folks at the Internal Revenue Service will let you extend the filing due date of your federal individual income tax return for another six months. Yes, six months! And it’s an automatic extension! So, when there is a chill in the air, the leaves are beginning to fall, and hope springs eternal as the Flyers start a new season, your taxes will be due again!
Now, although the extension is automatic, you will still need to do something by April 18th. You will need to complete and file a Form 4868 – Application for Automatic Extension to File U.S. Individual Income Tax Return. By filing this extension form, your federal individual income tax return will not be due until October 16. Guess why it is not October 15th? That’s right, October 15th is a Sunday, pushing the extended due date ahead to October 16th. Now you‘re catching on!
But be forewarned, the Form 4868 extension extends the time to file your income tax return. It DOES NOT extend the time to pay your tax. Any tax estimated to be due needs to be paid by April 18th with the filing of the Form 4868 to avoid penalties and interest. I said earlier that the folks at the IRS were swell; I didn’t say they were crazy! There is no requirement to pay by April 18th with a timely filed extension. But if not paid, there are late payment and late filing penalties as well as interest charges that will be due. There is a technical requirement that the Form 4868 report (but not pay) the “full amount properly estimated”. Thus a reasonable estimate should be reported even if it results in an amount due on the form.
So what happens if you fail to file an extension? There will be a late filing penalty (5% of the late tax balance due per month) and a late payment penalty (1/2% of the late tax balance due per month), each capped at 25%. Interest will also be charged based on any tax balance that was due April 18th. However, if you do file an extension, and there is a balance due when you file your return, you will still be charged interest, and you will only be subject to the late payment penalty if the balance due exceeds 10% of the tax. The late filing penalty, the more costly of the two penalties, will not be assessed.
So if you prefer spring or fall, or get motivated during the beautiful months of summer, those swell folks at the IRS will be ready and waiting for you!