Kevin McCormally's Tax Tips: The Extension Option
Thursday, April 13, 2006SUSIE GHARIB: So you`re staring at that stack of paper and realize you`ll never get your Federal income taxes filed by Monday`s deadline. What do you do? For starters, listen to Kevin McCormally, editorial director of "Kiplinger`s Personal Finance" with tonight`s tax tip.
KEVIN MCCORMALLY, EDITORIAL DIR., "KIPLINGER`S PERSONAL FINANCE": Talk about mixing up church and state. This weekend tangles up Passover, Easter and the tax deadline. If you`re still working on your 2005 forms, maybe it`s time to throw in the towel, file for an extension, enjoy the weekend and turn back to taxes later in the month. The worst thing you can do now is let the rush to the finish line propel you into a costly mistake. And this year the IRS is actually making it easier than ever to procrastinate. In the past, folks who needed more time used a Form 4868 to push the deadline to August 15. Then, if they had a good excuse, they could file another form to put their tax day all the way back to October 15.
But that two-step process has been eliminated. Now filing a Form 4868 by midnight Monday buys you the full six months. This extension is automatic, no questions asked. Of course, it only pushes back the deadline for filing the forms, not for paying the piper. If you owe money, you`re supposed to estimate the final bill and send in the balance with your Form 4868. If you have a refund coming, you don`t have to send them a check. Of course, if you`re sure you have money coming back, you probably don`t have to worry about the deadline at all. The penalty for being late is based on what you owe when you file. So if you owe nothing, there`s no penalty for missing Monday`s deadline. Now, if you`re making certain elections on your return, it does have to be filed on time even if you have money coming back. But that applies to relatively few taxpayers. Enjoy your weekend. I`m Kevin McCormally.
GHARIB: And I know Paul, you`re going to enjoy your weekend because you already did you taxes, right?
KANGAS: Right.
