Friendly Reminder: A Tax Extension Doesn’t Give You More Time to Pay

Haven't filed your taxes yet? Good news: You can get a six-month extension to do them.

Haven’t filed your taxes yet? Good news: You can get a six-month extension to do them. Bad news: You still need to pay your taxes by April 18 (this year’s deadline), or you’ll owe interest and fees for making a late payment. You have to do your best to estimate what you owe and make or postmark the payment by April 18.

How to Get an Extension to File Your Taxes

You can request an extension from the Internal Revenue Service by either submitting an electronic payment of your estimated tax due, filing an electronic Form 4868 or filing a paper Form 4868. Each option automatically gives you a six-month extension for filing your tax return, meaning you have until Oct. 18 to send in your paperwork.

To make an electronic payment to the IRS, you can make an online direct payment from your bank account, use the Electronic Federal Tax Payment System (requires enrollment) or use a credit or debit card. Making an electronic payment means you do not have to file a Form 4868, as the payment triggers an automatic six-month extension. If you file a paper Form 4868, you should include your payment.

What to Do If You Owe But Don’t Have the Money

People often want an extension from the IRS because they don’t have enough money to pay their tax bill. But that’s not how it works.

If you don’t have the cash to pay your taxes, you can make a partial payment, though the unpaid balance will be subject to interest and a late-payment penalty (generally one-half of 1% of the unpaid tax each month the balance goes unpaid, up to 25%). You could also pay your taxes with a credit card, though there’s a processing fee to do so, plus the interest you’d owe your credit card company. You can learn more about paying your taxes with a credit card here. While the IRS offers installment plans, you must file your tax return to apply for one.

Not only can paying your taxes late get expensive due to interest and fees, it could potentially damage your credit: The IRS could place a lien against your property for unpaid tax debt, which will show up on your credit report as a derogatory item. That can drive up the costs of other things in your life, like loan rates and insurance premiums. (You can see what’s affecting your credit by getting a free credit report summary every 14 days on Credit.com.)

Whether you decide to get an extension or file your tax return under deadline pressure, do your best to not rush through your work, because mistakes can cost you, too. Check out this list of 50 things to know if you haven’t filed your taxes yet.

Image: Tempura 

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