The April 18 tax deadline is coming up. If you need more time to file your taxes, you can get an automatic six-month extension from the IRS. Here are a few things you should know about filing an extension. More time to file is not more time to pay. An extension to file will give you until October 17, 2016 to file your 2015 taxes. It does not, however, give you more time to pay your taxes. Estimate and pay what you owe by April 18 to avoid a potential late filing penalty. You will be charged interest on any tax that you don’t pay on time. You may also owe a penalty if you pay your tax late. Interest is normally charged on any unpaid tax.
When you eventually file your return, if there is a balance due, that voids your extension and you will be subject to two very stiff penalties.
Late Payment Penalty
The late payment penalty is usually ½ of 1% of any tax (other than estimated tax) not paid by April 18, 2016. It is charged for each month or part of a month the tax is unpaid. The maximum penalty is 25%.
Late Filing Penalty
A late filing penalty is usually charged if your return is filed after the due date (including extensions). The penalty is usually 5% of the amount due for each month or part of a month your return is late. The maximum penalty is 25%. If your return is more than 60 days late, the minimum penalty is $135 (adjusted for inflation) or the balance of the tax due on your return, whichever is smaller.
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