"Nothing is certain but death and taxes" is a famous, or infamous, saying, and we know that it's true; every year, as April rolls around, so does tax season. Yet, we always seem to be caught flat-footed. We worry about how to avoid late filing penalties, whether we've filled out the forms correctly (or filled out the right forms, for that matter) and whether we can afford the money we owe.
The good news for the 2008 tax season, however, is that the IRS has guaranteed to accept every extension filed here. The bad news is that you still have to do paperwork to avoid late filing penalties, and if the extension is done incorrectly, you may be subject to more penalties.
What You Need to Know for a 1040 Tax Extension
It is important that you use the correct forms when preparing your extension, to avoid more late filing penalties. A 1040 tax extension can only be used for tax forms with a 1040 designation.
It is essential to understand that filing a 1040 tax extension helps avoid late filing penalties only. It does not put an owed payment on hold, and you will need to estimate that payment. While filing for an extension doesn't require you to make a payment of your estimated taxes, the IRS will charge interest on what is owed if it isn't paid by the normal due date. In addition, you may be charged late payment penalties.
If the IRS thinks you've underestimated the payment, you'll be charged interest on the remainder due. The same holds true if you pay less than 90% of what is owed. You'll be charged 0.5% interest every month on the remainder until the balance is paid in full.
If you're making a payment, you'll need to make sure it's reported. How it's reported depends on what form you would normally file. Instructions on how to report your estimated payment can be found in the following places on your form:
- 1040: line 67
- 1040A: line 43
- 1040EZ: line 10
- 1040NR: line 62
- 1040NR-EZ: line 21
Filing a 1040 tax extension does not exclude you from late filing penalties if the extension itself isn't filed on time. A tax extension is in lieu of your regular tax forms and the same rules apply. It has to be in before April 15, along with your estimated payment of taxes owed.
Filing an extension will only push it back for six months; you can't avoid it forever. While there may be exceptions for those living out of the country at the time, the exceptions are few. When you file your extension, make sure that you do so on time and that your taxes are filed before October 15 of 2009.
Filing a 1040 tax extension is as easy as point and click. By using our e-file services before April 15, you will be able to avoid any late filing penalties for the 2008 tax season.
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1040-Tax Extension will file your online tax extension with the IRS and guarantee that the IRS will accept your application. Visit us online for automatic extension on your individual tax return.
