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Taxpayers who were unable to meet the tax due date were able to request an extension of time to file until Oct. 15. This extension date is now nearly upon us.

Taxpayers filing a Form 1040 will have needed to file a Form 4868 in order to obtain the October 15th extension.

It’s important to note that this extension gives you more time to file your taxes but does not give you more time to pay the due balance.

Even if you filed for an extension you should ensure you pay the owed balance by the due date otherwise you’ll be liable to pay interest or additional late fees. The IRS has payment plan options available which we detail below.

Does the tax extension deadline apply to you?

  • If you filed the IRS Form 4868 on or before the May 17, 2021, filing deadline, you will be given an extension of your tax filing deadline until October 15, 2021.
  • If however, you didn’t file IRS Form 4868 on or before the May 17 tax-filing deadline, and you als didn’t file your tax return either  the IRS will view your taxes as being very late and the IRS is likely to add interest to the amount owed as well as apply failure-to-file penalties and failure-to-pay penalties.

Although October 15 is the last day for most people to file, some taxpayers may have more time. They include:

  • Members of the military and others serving in a combat zone. They typically have 180 days after they leave the combat zone to file returns and pay any taxes due.
  • Taxpayers in federally declared disaster areas who already had valid extensions. For details, see the disaster relief page on IRS.gov.

State deadlines may differ

The IRS also reminds taxpayers to check their state filing and payment deadlines, which may differ from the federal July 15 deadline. A list of state tax division websites is available through the Federation of Tax Administrators.

What happens if you miss the October tax extension deadline?

  • You’ll owe more interest. A tax extension gives you more time to file your return, not more time to pay.
  • You may owe a higher late-payment penalty. The IRS’s late-payment penalty normally is 0.5% per month of the outstanding tax not paid by the filing deadline. The maximum penalty is 25%. You’re supposed to pay at least 90% of your tax liability by the regular filing deadline.
  • You may owe a late-filing penalty. The IRS can also sock you with a late-filing penalty of 5% of the amount due for every month or partial month your tax return is late. The maximum penalty is 25% of the amount due.

Schedule federal tax payments electronically

Taxpayers can file now and schedule their federal tax payments up to the October 15 due date. They can pay online, by phone or with their mobile device and the IRS2Go app. When paying federal taxes electronically taxpayers should remember:

  • Electronic payment options are the optimal way to make a tax payment.
  • They can pay when they file electronically using tax software online. If using a tax preparer, taxpayers should ask the preparer to make the tax payment through an electronic funds withdrawal from a bank account.
  • IRS Direct Pay allows taxpayers to pay online directly from a checking or savings account for free, and to schedule payments up to 365 days in advance.
  • Choices to pay with a credit card, debit card or digital wallet option are available through a payment processor. The payment processor, not the IRS, charges a fee for this service.
  • The IRS2Go app provides the mobile-friendly payment options, including Direct Pay and debit or credit card payments on mobile devices.
  • The Electronic Federal Tax Payment System (EFTPS) is convenient, safe and easy. Choose to pay online or by phone by using the EFTPS Voice Response System.

The IRS recommends that taxpayers who are unable to pay their taxes in full should act as quickly as possible. Tax bills can quickly accumulate more interest and penalties the longer they sit.

What if you can’t pay in full by the due date?

Several payment options are available on IRS.gov/payments to help taxpayers who can’t pay in full and some can offer taxpayers smaller penalties.

Most taxpayers who cannot pay in full have the following payment options:

Available for: individuals who owe $50,000 or less in combined income tax, penalties, and interest, businesses that owe $25,000 or less in combined payroll tax, penalties, and interest and have filed all tax returns. Most taxpayers qualify for this option, and an Online Payment Agreement can usually be set up in a matter of minutes on IRS.gov/opa.

For taxpayers who don’t qualify for the online payment agreement option above, or choose not to use it, can instead apply for a payment plan by submitting Form 9465, Installment Agreement Request. Certain fees may apply.

Some taxpayers may be able tp contact the IRS to temporarily delay the collection process. Generally, this is only if the IRS deems the taxpayer as being unable to pay and they may choose to delay collection until the taxpayer’s situation improves. Penalties and interest continue to accrue until the full amount is paid.

Certain taxpayers are able to settle their tax bill by submitting an offer in compromise which allows them to pay less than the total amount owed. To help determine eligibility, use the Offer in Compromise Pre-Qualifier tool.

In addition, taxpayers can consider other options for payment, including getting a loan to pay the amount due. In many cases, loan costs may be lower than the combination of interest and penalties the IRS must charge under federal law.

How can you get an extension for my next tax return?

If you already know you’ll need more time to do your 2021 taxes, be sure to file IRS Form 4868 on or before next year’s tax-filing deadline, which is April 15, 2022.

  • Getting an extension does not give you more time to pay. Filing for an extension means you have more time to complete and file your tax return. When you file for an extension, you can estimate what you owe and send some or all of that with your extension request. If the estimated payment ends up being less than what you actually owe, you’ll likely need to pay interest on the difference.
  • Don’t neglect filing just because you can’t pay the bill. The IRS offers installment plans if you can’t pay your taxes.
  • Get an extension when you make a payment. Taxpayers can also get an extension by paying all or part of their tax due and indicate that the payment is for an extension using Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or a credit or debit card. When getting an extension by making a payment, taxpayers do not have to file a separate extension form and will receive a confirmation number for their records.

We hope you found this article interesting! However, do note that it should not be used as a substitute for competent legal and/or other advice from a licensed professional. Make this easier by inviting your Accountant into Landlord Studio for reporting access.

Landlord AccountingREal Estate TaxesTax Deductible ExpensesTaxes

Ben Luxon

Ben is the editor and lead writer for Landlord Studio. He has worked with real estate professionals all over the world and written educational articles on tech, real estate, and financial growth for sites such as Forbes, NARPM, and Business Magazine.

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