Last Day to File Taxes: Extensions and Payment Options

Today is the filing deadline for 2011 tax returns. Still need more time? According to the Internal Revenue Service, you can get an automatic six-month extension online through the Free File link at IRS.gov.

Anyone, regardless of income, can use the free service to electronically request an automatic extension on Form 4868. Filing this form gives taxpayers until Oct. 15 to file a return. According to the IRS, this is only an extension of time to file; not an extension of time to pay estimated taxes.

To get the extra time, taxpayers must estimate their tax liability and pay any amount due. Taxpayers can e-pay what they owe using the Electronic Federal Tax Payment System, by electronic funds withdrawal or with a credit or debit card. Those who choose to pay by check or money order should make the payment out to the “United States Treasury.”

By properly filing Form 4868, a taxpayer will avoid the late-filing penalty, which is normally five percent per month based on the unpaid balance. In addition, any payment made with an extension request will reduce or eliminate interest and late-payment penalties that apply to payments made after April 17. The current interest rate is three percent per year, compounded daily, and the late-payment penalty is normally 0.5 percent per month.

According to the IRS, taxpayers can also choose to request an extension through a paid tax preparer, using tax-preparation software or by filing a paper Form 4868, available at IRS.gov. Of the 10.5 million extension forms received by the IRS last year, about four million were filed electronically.

Details on all filing and payment options are at IRS.gov.

Source: IRS