April 15 has come and gone. If you didn’t quite finish your tax return, you should have filed Form 4868, Application for Automatic Extension of Time to File, to the IRS.
This automatic extension gives you another six months to file your tax return – no questions asked.
Your tax return is now due October 15.
It’s easy to breathe a sigh of relief, put away your files, and forget about taxes for now.
Before you do, however, consider the following:
Finishing up won’t be any easier in October
Unless you are waiting for a specific form or piece of information, there’s probably nothing that will be easier to do this fall than now. Life has a way of being just as busy later, and it certainly won’t become simpler to remember the detail of 2013 six months from now.
You may as well keep working on your return and finish it up as soon as possible.
If you have most of your information, do as much as possible on your return now. Use estimates where necessary, so you have as close an idea as possible on how much tax you owe.
If your return is complex, or you keep hoping to find one more deductible receipt or another tax break, you may be tempted to keep putting off filing your return. Rather than wait, go ahead and file. If you find a significant item after you file, you can always file an amended return.
You can’t get a refund until you file
If the IRS owes you money, you should file your return and get your refund as soon as possible.
Sure, interest rates on bank savings accounts are low right now, leading many people to think it doesn’t matter if Uncle Sam holds their money for them. It’s your money, however, and you can at least invest it.
And if you have any credit card debt, possibly at 18% interest or higher, that’s all the more reason to file your return now. Paying interest while the IRS gets to hold your money for free is a losing idea.
If you owe more tax, you could be penalized
Even if you paid tax when you filed for your extension, you could discover you owe more when you finish your return. It happens. Owing penalties and interest on top of the taxes only makes it worse.
The longer you wait, the higher both penalties and interest will be.
Don’t forget to enter payments you made with your extension
When you resume working on your tax return, be sure to enter any taxes you paid when you filed for an extension so you don’t overpay. It’s an easy mistake to make.
When you file your return, there’s no need to notify the IRS that you filed for an extension.
How long do you think it will take you to finish your return?