Susan Tompor for USA Today writes: The last minute — if you're into dragging things out — officially hits Monday for filing your federal income tax return.
Of course, anyone could have a good excuse for not filing a tax return by now. The dog ate your 1099s. March Madness took over your every waking moment. You're still trying to dig up receipts for all those old gambling losses to offset that big win.
The good news: Form 4868 is only a click away and offers an automatic six-month extension until Oct. 15. If you qualify for the Internal Revenue ServiceFree File program, several companies offer free filing for Form 4868, too. See www.irs.gov.
The bad news: You will owe interest on any tax owed that is not paid by the regular due date of your return. The interest accrues until you pay the tax owed. A late-payment penalty could be charged, too, unless you show a reasonable cause for not paying on time.
This year, some taxpayers might have more excuses for filing close to the deadline or even wanting an extension to file later, thanks to extra delays for specific forms due to the 2012 Taxpayer Relief Act.
But many taxpayers can avoid the late-payment penalty — if they're filing any of 31 specific forms that were delayed. Forms include Form 3800 General Business Credit,Form 5695 Residential Energy Credits and Form 8863 Education Credits.
Mark Luscombe, principal analyst for CCH, a Wolters Kluwer business, noted that a taxpayer must still make a good faith effort to properly estimate and pay the tax due with the extension request.
Any year, tax filers can find reasons to delay filing. A taxpayer might want an extension if specific statements are lost or have not yet arrived.
If only one statement is missing, the tax filer typically would bring W-2s and other paperwork to a tax preparer before the April 15 deadline, then the tax preparer can estimate the taxes owed, have the filer pay that amount by the deadline and request an extension by April 15, said George Smith IV, a CPA in Southfield, Mich.
He said his firm typically files about 150 extensions a year. Perhaps not surprisingly, most are the same people year after year.
You should think twice if you only want to file an extension because you know you owe a lot of money.
"Not a good idea at all," Smith said.
Filing an extension does not give you more time to pay what's owed, Smith said. The failure-to-pay penalty is 0.5% per month, up to a maximum of 25% of what is owed. Plus individual taxpayers would owe interest a bit above 3% on taxes and penalties. The IRS interest rate on underpayments changes quarterly.
But it's better to file Form 4868 than do nothing. If you don't file a return, you'd face the failure-to-file penalty, which is 5% per month on the unpaid tax due for a maximum penalty of 25% of taxes owed.
What should you do if you owe money?
Do you have a credit card that currently offers 0% on purchases or balance transfers? Even if you don't have one, it may be possible if you have excellent credit to apply now and transfer the balance to a new 0% card, said Greg McBride, senior financial analyst at Bankrate.com.
Remember that the 0% offer will expire; it might only last 12 months.
However, charging your tax balance to a major credit card triggers a convenience fee charged by the IRS-approved credit card processor. Check the fee calculator at the processor's website to know the charge in advance. Charging $1,000 to your credit card would generate a fee of $23.50 for example, if you used the service through OfficialPayments.com.
Or ask the IRS for an installment agreement, which would spread the debt over months or years, said Barbara Weltman, author of J.K. Lasser's 1,001 Deductions and Tax Breaks 2013.
If you think you could pay the entire bill within 120 days, you may ask the IRS for a short-term extension either by calling the IRS at 800-829-1040 or requesting the extension using the Online Payment Agreement Application at www.irs.gov.
No fee is charged for the 120-day extension, but interest will be charged and a late-payment penalty might be imposed.
Pull out that paperwork and get cracking. Maybe things won't be nearly as bad as you think.
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