How do I get an extension of time to file?
This one is easy.
If you use a professional preparer, call and ask the preparer to extend your return. Because this is a very simple transaction, many will file the extension for you without charge. The extension request doesn’t need to be signed.
If you are a do-it-yourselfer, go to www.irs.gov and download Form 4868. It’s a very simple form that you can complete and mail, use an e-filing program, or use the free file program at the IRS website. Close to tax time, the IRS website features the extension process and makes it even easier.
Form 4868 asks you to estimate your 2011 liability. The IRS says that if your estimate is unreasonable, they may void your extension. However, taxpayers often enter zeros and still have their extensions granted.
If you think you owe taxes, estimate how much you owe and make a payment along with the extension request. If you pay too much, you’ll get the excess back with you file your return, generally with interest. If you pay too little, you’ll pay interest and penalties.
If you are filing electronically and want to send a payment, you can have payment deducted from your checking or savings account. Or, if you are mailing in your request, enclose your check with the extension request.
You now have until October 15 to file your return.
Most states (including Illinois and Wisconsin) extend your return automatically if you file a federal extension. If you are extending only your state return or want to make a payment toward your state taxes, you’ll need to file a state extension though. Each state has a form on their website.
The IRS doesn’t charge to file for an extension, but there are several costs to filing late:
If you don’t pay by April 15 (April 17 this year), you’ll pay interest from April 15 until the date you pay the tax.
Second, there’s a late payment penalty. This penalty is one-half percent of the tax due. It is charged for every month or partial month until you pay the tax. That’s 6 percent a year, in addition to the interest. This penalty caps out at 25 percent after about 4 years. You can sometimes avoid this penalty if you had reasonable cause to pay late. If you’ve paid 90 percent of your liability by April 15, you are considered to have reasonable cause.
Third, there’s a late filing penalty. This penalty is much steeper and is 5 percent of the amount due for each month (or part) that your return is late. If your return is more than 60 days late, this penalty is a minimum of $135 or the amount you owe. Again, you can sometimes avoid this if you had a good reason for filing late. Be warned, that, even if you extend, but don’t file by October 15, this penalty sets in.
