Did you file an extension for your tax return this year? If so, the time to have your actual tax return filed before the extended deadline is running out!
Let's recall what a tax extension is...
A tax extension gives your more time to actually file your tax return. You may need this time if you are still gathering documents, busy with work, other more pressing needs at the time, or any reason you may have needed the extra time to file your taxes. The IRS gives you 6 additional months to get your taxes filed timely. However, you must apply for the extension by the last day of the current tax season. Most often, this day is April 15th. This means you have until October 15th of the tax year to file your extended tax return. If you did not file the extension by that deadline, your return is considered late. However, if you did file the extension timely, you have 6 additional months to get your tax return filed on time.
Now what the 6 month extension does not do....
Filing an extension does not give you more time to pay your taxes. It only gives you more time to file the return.
So what does this mean if you owe taxes?
If you owe taxes, you should send in a payment when you file your extension. If you are unsure how much to pay, you should pay 100% of the taxes you owed last year, or 90% of the taxes you expect to owe this year.
Example:
100% rule: If you paid $2,000 is taxes last year, you should pay $2,000 with your extension to avoid a late payment penalty. However, when you actually file your tax return, you may owe more or less, but you won't have a penalty.
90% rule: You can use the IRS calculator to estimate your tax amount that you may owe. Once you have that number from the IRS calculator, you should pay at least 90% of that number to avoid an underpayment of tax penalty.
Alternate link to estimated taxes owed. Click here.
Reminder!
File your extended tax return before October 15, 2023.
If you owe taxes, the sooner you pay the taxes, the less you will pay in interest.
If you miss the October 15th deadline, you will incur a late filing penalty plus interest.
If you extended a business return (LLC, S-Corp, or Partnership) your return is due September 15, 2023!
If you need help filing your tax return, contact us for assistance.
