Posted Apr 15, 2014 08:15 pm CDT
Although embedded in the national conscience, the April 15 deadline for filing federal income tax returns may, in reality, be somewhat discretionary.
However, penalties for late payment can be severe and compliance with the law is easier than many may realize. For example, simply filing a Form 4868 (PDF) request for an automatic extension of time gives taxpayers until Oct. 15, 2014 to file their actual returns.
For those who can’t pay the taxes they owe in full by April 15, though, filing on time is critical to avoid a five percent monthly penalty which can quickly add up to 25 percent, reports Bankrate.com.
Likewise, those who apply for an automatic extension on Form 4868 will still owe penalties on any tax not paid by April 15, including any failure to pay due to an error in calculating how much tax they owed, points out the Smarter Investor page of U.S. News & World Report.
So to avoid problems payment for all tax owed should be included with the Form 4868 extension request.
Another option is to meet the April 15 payment deadline by covering any tax owed by credit or debit card, reports Bankrate.com. There are additional fees to process a tax payment through the phone numbers and websites listed in the article, yet the peace of mind and elimination of potential penalties will be worth the cost to some taxpayers.
The IRS also will accept monthly payment plans (explained in detail in the article), and usually does so more or less automatically for those who have previously paid on time and owe less than $10,000, even if they have funds on hand that could cover the tax payment. While a payment plan costs more than paying taxes on time, it can represent significant saving when compared to the cost of noncompliance.
Those who owe less than $50,000 in taxes can apply for an installment payment plan on the IRS website; those who owe more need to file Form 9465 (PDF). Some who meet strict criteria may also be able to negotiate with the IRS to compromise on the amount of tax due.
The IRS website offers options for free electronic filing, too.
Even taxpayers who actually miss the April 15 filing deadline likely won’t face any immediate penalty, unless they owe money to the government, notes the Associated Press.
But timely filing may help reduce potential IRS scrutiny.
Fewer than 1 percent of all returns will be audited by the IRS this year, reports another Associated Press article. However, those who operate cash businesses are more likely than average to be targeted for review. Lawyers and other professionals have also traditionally been scrutinized more closely by federal and state tax officials.
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