File a Tax Extension!
With only four days until April 15th, most of us have already filed our state and federal income tax returns. For those of us that haven’t, though, a tax extension should be a must!
If you can’t get your records together in time, taxpayers can always get an automatic six month tax extension to file their U.S. income tax returns. To get the tax extension, taxpayers should file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, by April 15, 2015. It’s important to be aware, though, that an extension of time to file a return does not grant a taxpayer any extension of time to pay any outstanding tax liability.
Late Payment Penalty
The Internal Revenue Service assesses a late payment penalty on taxpayers for any tax not paid by April 15, 2015. The penalty will be charged for each month, or part of a month, that the tax remains unpaid and is calculated at ½ of 1%, up to a maximum of 25%. The IRS won’t assess a late payment penalty, though, if at least 90% of the taxpayer’s actual 2014 tax liability is paid before the regular due date of the tax return, whether through withholding, estimated tax payments, or payments made with Form 4868, or if a taxpayer can show reasonable cause for not paying on time.
Late Filing Penalty
In addition to the late payment penalty, the IRS will assess a late filing penalty if the taxpayer’s return is filed after the due date (including valid extensions). The penalty is usually 5% of the amount due for each month, or part of a month, that the income tax return is late. The maximum penalty is 25%. As with the late payment penalty, a taxpayer may be able to avoid a late filing penalty if the taxpayer can provide the IRS with a reasonable explanation for filing late.
If you owe back taxes and expect to late file your income tax return, contact an experienced New York tax attorney at Mackay, Caswell & Callahan, P.C. today. With over 30 years’ of tax experience and offices throughout New York State, we can offer experienced tax help.