IRS extends helping hand to late filers
NEW YORK — The deadline for filing federal and state income taxes is fast approaching, but many people aren’t yet ready to send in their tax forms — and probably won’t be by April 17.
In recent years, about 9 million Americans — or one out of every 14 filers — have sought extensions, according to the Internal Revenue Service. That’s likely to be true again this year, although taxpayers have an extra couple of days to file because the traditional filing date of April 15 falls on a Saturday.
The reasons people generally give for being late range from not having all the necessary documents to fear that they won’t be able to pay the tax that’s due. And there’s plain old procrastination.
Jackie Perlman, a senior tax research coordinator for H&R Block in Kansas City, Mo., said taxpayers who can’t make the regular filing deadline should request an extension on IRS Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.
That will get them six extra months — until mid-October — to file their forms. In the past, taxpayers got just four months automatically and had to apply again for two more, if needed; as of this year, they get an automatic six months. Most states have similar extension forms.
But requesting an extension to file doesn’t get the taxpayer off the hook on paying taxes. Form 4868 requires taxpayers to estimate their tax liability for 2005 and mail the balance due to the IRS.
“I can’t tell you how important it is to get that extension request in, especially if you think you owe taxes,” Perlman said. “If you don’t get it in and you owe taxes, you face a nasty penalty — 5 percent per month of the amount due, up to 25 percent.”
And what if the taxpayers don’t think they can pay?
LeValley suggests they “pay as much as they can toward what they owe.”
The reason is that taxpayers who don’t pay on time can be hit with a failure to pay penalty by the IRS of 0.5 percent per month plus interest of about 7 percent on the unpaid balance.