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The tax-man cometh. And you're not ready for him. Although you scrambled to gather your bearings, your IRS income tax returns are just not ready, for whatever reason. Perhaps you haven't received a 1099 that you're waiting for. Or perhaps, you had a major life event occur and you were too distracted to prepare your IRS income tax returns.
Or perhaps, you just procrastinated (it's okay, you can admit it).
Well, know this: The IRS allows you an extension to file. Taxpayers are automatically entitled to a six month IRS extension to file their income tax returns, upon making a request with the IRS by filling the appropriate forms. Now isn't that a bit of good news?
Or is it? Be careful. It's certainly a relief to late filers and the IRS extension is available to those who fill the Form 4868, but it does carry some confusing implications with it. Beware. Just because you filed an extension until October 15, it doesn't mean that your tax due date is October 15. Not at all, in fact. Your taxes are still due on April 15 and the IRS will start computing interest on your taxes from that date.
But I am expecting a refund, you say. So I'll be getting interest on that refund as of April 15, right?
Oh, but if only it were that way. The federal income tax law relating to interest on tax refunds is not reciprocal to the rules affecting owed income tax. Your date for calculating interest on a refund is not April 15. The IRS meter will only begin to run 45 days after a return is filed.
Here's another tip you need to know: You should estimate your income tax by April 15 and send it in to the IRS. Remember, if you owe any income tax, interest may start to accrue as of April 15.
More food for thought: Sometimes, it may just be wiser to take an extension on your filing as opposed to filing a timely return and then filing a subsequent amended return. Here's why -- tax experts will often tell you that an amended return is a red flag for audit. While this might not always be the case, an audit is a time consuming and stressful risk you might not want to take.
So think about these things as April 15 approaches. And by all means, check out the IRS website for taxpayer assistance and other resources.