Federal and state income tax returns are due a week from today. H&R Block Senior Tax Advisor Michelle Bachtel says the worst thing you can do is ignore the looming deadline if your taxes aren’t done. “To ask for more time, you can file an extension using form 4868. This gives you an automatic six months of extra time. It’s faster if you e-file the request through your tax preparer. The IRS will send you a message of receipt if you file that way. Paper applications, unfortunately, do not get acknowledged,” Bachtel says. She adds you should have an idea if and how much you will owe when you file for an extension, as it only gives you extra time to finish your return and not more time to pay. “Do everything you can to pay the full amount when you file for the extension. Otherwise you’ll face interest and penalties that could raise your bill by up to 25 percent. If you file the extension request on paper, you can attach a check or money order, but if you file electronically you can pay by authorizing a funds withdrawal from a checking or savings account. You can also pay by credit card, but it may be a few percentage points higher to offset the credit card company’s commission,” Bachtel says.
If you cannot pay the full amount of taxes you owe, don’t panic. Bachtel says taxpayers who owe money but can’t pay the full amount can use the online payment agreement application on www.IRS.gov. “If you owe $50,000 or less in combined tax penalties and interest, you can request an installment agreement and be immediately notified if the request is approved. An installment agreement allows you to make payments over time rather than paying in one lump sum. If you owe more than that, you would have to contact the agency directly. They should be able to set up some sort of extension for you to pay,” Bachtel adds.