Easing the Tax-Filing Crunch
An extension gives you more time to compile your tax records -- but you still have to pay what you owe.
Feeling overwhelmed by the prospect of filing your taxes? You’re not alone. But ignoring the problem and wishing it would go away is not the solution.
If you don’t think you can manage to file your 2009 tax return by the April 15, 2010, deadline, file for a six-month extension. It’s easy. Just fill out Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, estimate your tax bill, and pay what you can by April 15, 2010. That will delay the due date for your completed return until October 15, 2010.
With an extension, you can get more time for filing, but you will owe interest on any underpayment. And if you underpay by more than 10%, you may be subject to a penalty, too.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
If you have paid less than 90% of your tax bill when you file your request for an extension, you'll start racking up late-payment penalties of 0.5% a month on the unpaid amount, up to 25% of the balance, plus interest (currently 4%). Still, that's a lot better than failing to file altogether, which entails a more onerous penalty of 5% a month on the unpaid balance, up to 25%, until the return is filed.
For instance, if you file for an extension and pay your $5,000 tax bill three months later, you'll owe a $75 late-payment penalty plus interest. But if you don't file your return on time -- even if you pay up to three months later -- you'll owe a $750 penalty for failing to file.
“The bottom line is that if you don’t file, you’ll almost certainly pay more in the end,” says Mark Luscombe, principal federal tax analysis for CCH, a major provider of tax information and software.
If you don't owe any taxes, you can ignore the April 15 deadline, but you'll still want to file a tax return to claim your refund. Refunds have been averaging more than $3,000 so far this tax-filing season, up 10% from last year.
-
Are T-Mobile's Prepaid Perks a Home Run or a Strikeout?T-Mobile's prepaid lineup promises MLB.TV, T-Mobile Tuesdays and hotspot data. But do the perks make it worth switching?
-
Verizon Home Internet Is Offering Free Tech to New CustomersVerizon’s latest home-internet promotion includes free tech, but the real savings depend on pricing, speed needs and how long you stay.
-
Retirees in These 7 States Could Pay Less Property Taxes Next YearState Taxes Retirement property tax bills could be up to 65% cheaper for some older adults in 2026. Do you qualify?
-
Retirees in These 7 States Could Pay Less Property Taxes Next Year
State Taxes Retirement property tax bills could be up to 65% cheaper for some older adults in 2026. Do you qualify?
-
Estate Tax Quiz: Can You Pass the Test on the 40% Federal Rate?Quiz How well do you know the new 2026 IRS rules for wealth transfer and the specific tax brackets that affect your heirs? Let's find out!
-
5 Types of Gifts the IRS Won’t Tax: Even If They’re BigGift Tax Several categories of gifts don’t count toward annual gift tax limits. Here's what you need to know.
-
The 'Scrooge' Strategy: How to Turn Your Old Junk Into a Tax DeductionTax Deductions We break down the IRS rules for non-cash charitable contributions. Plus, here's a handy checklist before you donate to charity this year.
-
Are You Middle-Class? Here's the Most Tax-Friendly State for Your FamilyTax Tips We found the state with no income tax, low property tax bills and exemptions on groceries and medicine.
-
Social Security Benefits Quiz : Do You Know the IRS Tax Rules?Quiz Social Security benefits often come with confusing IRS tax rules that can trip up financially savvy retirees and near-retirees.
-
How Are I Bonds Taxed? 8 Common Situations to KnowBonds Series I U.S. savings bonds are a popular investment, but the federal income tax consequences are anything but straightforward.
-
Capital Gains Tax Quiz: How Well Do You Really Know IRS Investment Tax Rules?Quiz Take our capital gains tax quiz to test your investment taxes knowledge. Learn about loss rules, holding periods, and tax incentives that could impact your savings.
