If you haven’t submitted your income tax return yet — with one more day left until Tax Day — then it’s time to think about filing for an extension.
As of April 6, the Internal Revenue Service has received more than 103 million tax returns, out of 155 million the agency expects to get.
If you’re thinking of asking for more time, you’re in good company. The IRS anticipates receiving more than 11.6 million requests for extensions, pushing the income tax deadline out to Oct. 15. That’s a fairly common move for taxpayers with complicated returns.
For instance, investors in partnerships and S-corporations may still be waiting for their Schedule K-1, which will report their share of income, deductions and credits.
Businesses also can request an extension to file their returns and generate a Schedule K-1, so it could be a few months before investors have the information they need to file their own returns.
“If clients are still waiting for K-1s, we file an extension,” said Jonah Gruda, a certified public accountant and partner at Mazars USA. “The information they need to prepare their returns won’t come from those investments until after the summer.”
But bear in mind — even if the IRS grants you more time, you still need to pay the taxes you owe by April 17.
Here’s how to do it.
If you pay the IRS your estimated tax on the phone or online, the taxman will automatically process an extension for you to file.
Taxpayers can also submit Form 4868, either electronically or on paper, to push their filing deadline to Oct. 15. If you’re serious though, do it now – you have until April 17 to submit Form 4868.
Failure to file will hurt: The IRS will assess a penalty of 5 percent of the balance due for each month your return is late, up to a maximum of 25 percent.
If you don’t pay your tax bill by April 17, you’ll face a penalty of 0.5 percent of the balance due for each month your taxes go unpaid, up to a maximum of 25 percent.
Interest also accrues on taxes that go unpaid.
Filers who don’t have the cash on hand to pay the IRS can apply for a short-term payment plan, aiming to pay off the debt in under 120 days. You can also apply for a long-term installment plan if it’ll take you more time to get clear with the IRS.
A warning: Even with a payment plan, you’ll continue to see interest and some penalties accrue on your balance owed until you’ve paid off what you owe.
This story is part of CNBC’s Tax Week coverage as the filing season wraps up on April 17. Stay tuned for more stories on tax tips and savings opportunities.
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