Picture this—you have less than three weeks to file and submit your tax return, but you’re too busy to find the time to do it. Your anxiety and stress levels increase as the tax deadline gets closer. What should you do?
First, relax and know that you are not the only one experiencing this problem. More importantly, remember that there are ways to deal with late tax filings!
Let’s tackle this together. Below, we’ve gathered the most practical solutions and tips on tax return delays, specifically how to file IRS form 4686, so that you can prevent yourself from paying a lot of money for penalties.
What to know about IRS form 4686, the tax return delay (tax extension) form
If you know for sure that you won’t be able to make it by the due date, immediately file for a tax extension to avoid any possible penalties. All you need to do is fill in and submit Form 4868 to the IRS either by paper or electronically.
However, there’s a catch. Filing an extension for tax return delays only allows you more time to file, not more time to pay your tax. In other words, if you owe money to the IRS, you have to estimate and pay at least 90% of your tax liability with your Form 4868. Otherwise, you could face a late-payment penalty.
When is the deadline for filing IRS form 4686?
The deadline to file a tax extension is the same date to file a tax return, which is April 18, 2022. An extension will delay your filing deadline to October 17, 2022.
What happens if I don’t file a tax return delay?
This depends on whether you owe money to the IRS or the IRS owes you money.
If you have taxes to pay
You’ll be fined 4.5-5% per month of the tax amount owed plus interest. The maximum penalty can be up to 25%.
It’s important to remember that the penalties for failing to file a tax return or requesting a tax extension are more severe than the penalties for not paying your taxes on time (0.5%/month of the tax amount owed plus interest).
If you have a refund
You won’t suffer from penalties for not filing your tax return by the deadline, even if you don’t submit an extension. However, it might be different for state taxes.
That being said, you still should get your taxes filed and dealt with on time. This is mainly because you must file a tax return to get your money back.
How will I know if my tax extension is approved?
Normally, you will receive an email from the IRS confirming within a day after you e-filed Form 4686. If you sent the tax extension request by post, you won’t receive a confirmation email and will have to call the IRS to check. Otherwise, you can just wait and see — silence means no issues most of the time. The IRS only contacts you if there’s something wrong with your extension.
Why might my request for a tax return delay be rejected?
Though this situation doesn’t happen too often, there’s still a possibility that your tax return delay request will be rejected. This happens when individuals don’t file Form 4686 correctly. For example, if you made spelling mistakes or provided information that doesn’t match IRS records, your request might be turned down. In this case, the IRS will normally give you a few days to correct the errors and resubmit the form.
Another thing that could lead to rejection is unrealistic tax liability estimates. Not only will you not get an extension, but you might even be fined.
What are the requirements for requesting a tax payment delay?
The requirements are strict. Below is what you need to do to have some extra time to pay your income tax:
- File Form 1127 and submit it to the IRS on or before the date that the tax is due
- Provide a complete statement of all your assets and liabilities as of the end of the last month, plus an itemized list of money you received and spent in the three months preceding submitting your request for an extension to pay.
- Show that paying the tax by the original deadline would cause you extreme hardship (e.g., if you show it only causes inconvenience to you, there’s little chance your request will be accepted).
- Prove that paying the tax on time would result in a significant financial loss and that you don’t have the money or can’t raise it by selling property or borrowing.
Generally, you will get a six-month extension if your request is approved. Furthermore, the IRS requires some acceptable security before issuing a payment extension. Depending on your circumstance, the security could be in the form of a bond, a notice of lien, or even a mortgage.
Extensions are sometimes granted, particularly in the event of federally declared disasters.
Additional relief information is available on the IRS Disaster Relief page.
Always try to file your tax return as soon as possible. In case you can’t, try to make a request for a tax return delay using IRS form 4686. Remember that it will only give you more time to file your tax return, not more time to pay your taxes.
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You might also be interested in:
- How to Track Mileage for Tax Deductions with the Shoeboxed App
- What Is Receipt Data Extraction? And How Do I Benefit?
- How to Scan Receipts With the Shoeboxed App: A Step-By-Step Guide
- 4 Easy Ways To Upload Your Receipt Images To Shoeboxed
- Business Receipts: What Do You Need to Keep for Tax Season?
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