Taxes are one of those unavoidable things that we have to deal with every year. The deadline stays relatively the same, but many of us nonetheless find ourselves scrambling to gather our documents. The reasons for this are as varied as the taxpayers themselves, but many times it simply comes down to being disorganized and lacking time management skills. If you are in no way ready to file your taxes, it may be time to file an extension.
To file an extension, submit Form 4868 electronically or by mail before the April 18 deadline. The IRS will grant a 6-month extension, for any reason, provided the proper form is filed on time. Be aware that some states may not accept an IRS extension and will require you to file a separate state extension form.
If you happen to miss the extended deadline, you will be subject to a failure to file penalty of 25% of the tax due. Be sure to remember, as well, that filing an extension when you OWE taxes only provides more time to file, not more time to pay. Your payment is still due in full by the April 18 deadline.
If payment is a challenge, the IRS does offer some payment alternatives. You can request a short extension of 60 to 120 days to pay your bill. You will still have to pay penalties and interest but at a lower rate. There are also installment agreements offered by the IRS that let you pay a set amount each month until the debt is paid in full. As another option, the IRS suggests those who owe pay the tax due with a credit card or loan. In many cases, the interest will be lower than the combined penalties and fees required by the IRS.
Navigating the cacophony of IRS forms, schedules and statements are enough to drive anyone to despair. That is why I always recommend that my clients take advantage of the many financial professionals available, including Certified Professional Accountants or Certified Divorce Financial Analysts like me. If you have questions about the implications of this year’s taxes on your divorce, contact me today — together we can do this!