Do you plan to file for a tax filing extension?

This year, the normal April 15 tax deadline falls on Washington D.C.'s Emancipation Day which means that taxpayers have a few extra days to file and pay their taxes by the April 18 deadline. For many taxpayers, three extra days won't be a sufficient amount of time to get their financial affairs in order. Luckily, these individuals can take advantage of the Internal Revenue Service's tax extension program.

During 2014 alone, an estimated 12 million taxpayers filed for a federal tax extension. To file for an extension, a taxpayer must fill out and file tax form 4868 and, in most cases, a six-month extension is automatically granted. It's important to note, however, that obtaining a tax filing extension does not exempt a taxpayer from paying his or her taxes by the April 18 deadline.

Individuals who fail to estimate and pay any taxes that are due by the tax deadline must pay interest, which can vary, on the total amount owed. Additionally, an individual must pay a half percent late payment penalty for every month that a payment is overdue, the amount of which cannot exceed 25 percent.

Taxpayers who cannot afford to pay their taxes may wrongly believe that they just shouldn't even file their taxes. However, the penalties assessed for a late filing is even more punitive than those related to a late payment. For every month that an individual is late in filing his or her tax return, the IRS "charges a five percent late filing penalty for each month or part of a month," that is past the deadline, not to exceed 25 percent. Therefore, a taxpayer who cannot afford to pay his or her taxes would still be wise to file a tax return.

In cases where an individual is dealing with crippling amounts of tax debt or disputes the amount owed, an attorney can answer questions and provide guidance related to possible options for remedying a tax debt situation or dispute.

Source: The Motley Fool, "Need an IRS Tax Extension in 2016? Here's What You Need to Know," Feb. 29, 2016

U.S. News & World Report, "Tax Day: Some Facts About the IRS Filing Deadline," Tom Risen, April 15, 2014, "Why is Tax Day April 18?," Feb. 29, 2016

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