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Tax Prep & Filing

Time to Buy More Time

Here's how to ask the IRS for an extension for filing your return.

Editor's note: This is the transcript of Kiplinger Editorial Director Kevin McCormally's commentary on the April 13 broadcast of Nightly Business Report.

Let's call this Form 4868 weekend, a time millions of procrastinating taxpayers -- and their paid advisers -- will be filling out a Form 4868 rather than a 1040. The 4868 pushes the tax deadline all the way back to October 15. If you're among those needing extra time, you can file the form electronically if you use tax software or print out a copy and get it in the mail by midnight April 17.

The catch, of course, is that while this buys you extra time to fill out your tax forms, it doesn't push back the deadline for paying whatever tax you owe. You need to do enough of your 2006 tax work to come up with a reasonable estimate of how much you'll owe. Send in a check with your 4868 if you file by mail, or authorize the IRS to dip into your bank account on April 17 if you file electronically.

You're in good company if you need an extension. Each year between 8 million and 9 million of your fellow filers just can't make the April deadline. Check your state's rules if you need more time for your state forms, too. Some automatically grant an extension to those who file the federal form; others demand their own paperwork.

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Now, here's one of my favorite tax tips: If you have a refund coming -- as about 70% of all taxpayers do -- you don't have to ask for an extension. You see, the penalty for late filing is a percentage of the amount you owe with your return. If Uncle Sam owes you, there is no penalty. If you are making certain, rather arcane elections on your return, it does need to be filed by April 17 ... even if you have a refund coming. But that applies to relatively few taxpayers. If you're sure you'll get a refund, you can probably take the weekend off without shame. But file as soon as you can to get your money back.

See Kevin's previous tip.