The Internal Revenue Service extended the deadline to file income tax for individuals to May 17, 2021, on account of the coronavirus pandemic. Bear in mind that May 17 does not apply to residents of Louisiana, Texas, and Oklahoma who were affected by the February storms- the deadline for these residents has been extended to June 15, 2021. However, if you will be unable to file your income tax by the said deadline, you must file for an Extension for filing your income tax with the IRS. A simple process of applying for an extension will give you a window till October 15, 2021, to file your taxes.
As a taxpayer, you could be experiencing any setback, given the year we have had. If you think you cannot file your taxes by May 17, it is advisable to file for an extension as soon as possible.
The entire process is free of cost. All you have to do is fill out the extension request form via the IRS Free File Website. Form 4868 is half a page long and can be filled in no time. Once done, the extension will be applied automatically and taxpayers need not wait for any approval for the extension.
When to file for a tax extension
Most people applying for a tax extension are dealing with a more complicated tax filing process than many of their counterparts. Most people are dealing with multiple elements like numerous mortgage interest forms, student loans, home mortgages; not to mention the stimulus checks and unemployment benefits. Multiple elements can complicate the tax filing process, making taxpayers reach out for an extension to gather all information and file taxes accurately.
It is important to note here that the extension only applies to the filing of returns, and not to the payment of taxes. Taxpayers will still have to pay their taxes before the due date.
Approximate payment of taxes needs to be made before the tax deadline. The amount need not be exact. However, making a payment is necessary. If you have filed for an extension for filing your taxes, you will still have to pay estimated taxes to avoid late fees and penalty charges that may be levied by the IRS.
Other common reasons for filing an extension to file income tax returns include receiving incorrect tax statements to receive the tax statements like Form W-2 and Form 10999 late. American taxpayers living outside the U.S can also apply for an extension.
Mistakes to avoid when filing for a tax extension
One common mistake many taxpayers make is failing to pay their taxes by the deadline after filing for an extension for filing. Even if you have filed for an extension to file your taxes later, you must pay your taxes by May 17, 2021.
You will have to pay an estimated amount of tax before the deadline to avoid penalties. Calculate your estimated tax payment with the help of a tax professional to know what approximate amount you have to before the tax deadline. This will give you time to arrange for funds if need be.
Many taxpayers despite being in desperate need of filing an extension refuse to do so due to audits. The chances of an audit do not increase or decrease at all if you file for a tax deadline extension. There is no evidence of taxpayers being audited for simply filing for a tax deadline.
Another mistake that many taxpayers need to watch out for is mailing their paper extension applications to the right address. Sending the application to the wrong address can cause a delay in your extension being received and granted. Chances of your application not being received are also higher if you fail to mention the receiving address correctly on your application. As a result, you may have to pay a penalty if your application is not received at all.
Many people are unlikely to be able to file their taxes by May 17 this year. An extension on the filing deadline gives them some respite. However, taxpayers will still have to pay their taxes on time. Talk to our tax planners to know how to calculate your estimated tax payments to evade penalties.