CNN recently weighed in with a helpful article for you tax-procrastinators out there. Did you know that in many cases, the IRS doesn’t mind if you file your taxes late? Yes, you guessed it… file late if you are owed money by the Government… most likely you won’t be penalized!
Why Would You Do It?
Taxes aren’t the most fun in the world to complete. I recently finished up my taxes myself… and am still fuming from the process (Turbotax has a wonderful calculation of effective tax rate in the review stage)! Of course, I owe some money to the State of California, so this article doesn’t apply to me. Unlike California, I can’t send out IOUs instead of cash.
In all seriousness, tax procrastination happens for many reasons. Filing taxes is a lengthy process, involving an entire year of data. You’ve got to filter out what is relevant, and even know what you should keep in case of an audit. Even if you know you might be owed a decent amount, you might dread starting. Alternatively, you may know you are owed a small amount – and you are even less likely to start your taxes.
- I Thank YOU For the Interest-Free Loan! (Dave)
Extensions and Limitations
There are two things to keep in mind for you late filers. If you owe money, you’ll have to grab this form (4868) and file an extension. Extensions are automatic, but funds owed are not deferred. You’ll have to make an god faith estimate of what you owe (and pay it!). It’s best to file this form even if you think that you are owed a refund – just in case you aren’t, it’s better to have filed an extension in good faith then to get hit later with the late payment penalty (5% on the amount each month tardy, up to 25%).
For you folks who are ultra-tardy, know that you can’t continue to not file forever. The IRS is only required to pay you for what it owes in the last three years. If you wait too long, Uncle Sam thanks you for the donation!
Readers, have you filed your taxes yet?
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