When you file a tax extension, you are essentially asking the Internal Revenue Service (IRS) for more time to submit your tax return. However, it is important to keep in mind that a tax extension does not extend the deadline for paying any taxes owed.
After filing a tax extension, there are a few things you should keep in mind to ensure that you remain compliant with the IRS to and any potential penalties or fees.
Pay any taxes owed
Filing an extension does not give you an extension on paying any taxes owed. You should estimate how much you owe and pay it by the tax deadline to avoid any potential penalties and interest. The penalties for failing to pay taxes owed can be significant.
For example, the IRS may charge a penalty of 0.5% of the unpaid tax amount for each month that the payment is late, up to a maximum of 25%. Additionally, if you fail to pay your taxes by the deadline, the IRS may charge interest on the unpaid balance until it is paid in full.
If you are unable to pay your taxes in full, there are options available to you, such as setting up a payment plan with the IRS. It is generally best to contact the IRS as soon as possible to discuss your options, as the penalties and interest on unpaid taxes can add up quickly. For more information about how IRS payment plans work, be sure to speak with a licensed tax professional that you trust.
Gather your tax documents.
After you’re granted an extension be sure to use this extra time to gather all the necessary documents, such as W-2s, 1099s, receipts, and other financial records. This will help ensure that you’ll be fully prepared once you schedule a time to sit down with your accountant or CPA.
Complete and file your tax return before October 15
Working with a licensed CPA can help ensure that your tax return is accurate. They can also help ensure that you have claimed all the deductions and credits you are eligible for. Lastly, your CPA can help you file your return electronically.
Monitor your tax refund status (if applicable):
If you are due a tax refund, keep an eye on its status using the IRS’s “Where’s My Refund?” tool. It typically takes several weeks to process a refund, so be patient.
Do you have additional questions about what to do after you’ve filed for an extension? Call our office now to speak with a local expert.