Tax Day is almost here. We get the whole weekend as extra time, rather than needing to have everything turned in by tomorrow. But, for many of us, this still isn’t enough time to get things together. Indeed, Tax Day might have snuck up on you. I know that the entire month April is flashing by a lot faster than I thought it would.
I’ve had my tax return filed for almost two months now. However, since I owe, I like to wait until the last minute to pay. Might as well keep using that money for my benefit, right? However, I was caught off guard by something. I underpaid on my quarterly estimated taxes in 2010, so I owed a bit for last year. On top of that, the first quarterly tax payment of 2011 is due on Tax Day. This is something that trips a lot of people up. If you owe taxes, and if you need to make a quarterly tax payment, it can be almost like a double whammy. I will be dipping into my emergency fund a little bit to make up for my lack of foresight.
What If You Aren’t Ready for Tax Day?
My guess is that I’m not the only one who was caught a little bit off guard by the arrival of Tax Day. You might be missing some paperwork, or you just may not have your return ready to go. Perhaps you owe more than a little dip into the emergency fund can help with. In these cases, you should know that you do have options.
If you aren’t ready to file, you can ask for an extension. You need Form 4868, which can be filed electronically. It’s not very long. Just about any individual filing a return qualifies for a six-month extension. If you need a little more time, this can provide it for you. However, it is vital that you remember that you still have to pay. If you know you will owe taxes, you need to pay what you think you owe (and it better be at lest 90% of what you end up owing) by Tax Day. Of course, if you are expecting a refund, you won’t get that until after you file your tax return.
If you can’t afford to pay the IRS, there are options as well. The IRS offers a payment plan. If you owe $25,000 or less in taxes, fees and penalties, you can apply for a payment plan. You submit what you owe, along with what you think you can pay each month, and the IRS decides whether or not to approve. There is interest involved, but it is usually a lot less than the cost of paying your taxes with a credit card or with payday loans. If you aren’t sure how you will pay your taxes, a payment plan with the IRS can be a good option.
It is important to file a tax return, even if you can’t pay, or file an extension. The penalties for failure to file are hefty. You will be better off admitting you can’t pay and setting up a payment plan, or filing an extension if you aren’t ready to turn in your return, than ignoring the problem. Because it won’t go away.