Are you struggling to get all the information together to file your 2011 tax return by the April 17, 2012 filing deadline? If so, make sure that your tax preparer submits form 4868 Application for Automatic Extension of Time To File U.S. Individual Income Tax Return by the April 17, 2012 deadline.
Filing the extension will give you a 6 month extension to your deadline ( 4 months for taxpayers out of the country) so that your filing deadline becomes October 15, 2012.
The big reason for filing the extension is to save you the late filing penalty. If you do not file the extension you will be subject to a late filing penalty each month which is 5% of the tax due on your return up to a maximum of 25%. If the return is more than 60 days late the minimum penalty is the lower of $135 or the balance of the tax due. This penalty can get quite large if you don’t pay all your tax by April 17, 2012.
Even if you file form 4868 to get the extension to file the return, it does not extend the time to pay your tax. All your 2011 tax is still due by April 17, 2012. So one of the requirements to file form 4868 is to estimate how much tax is due and enter that information on the form.
If you do not pay the tax by April 17, 2012 you will be charged a late payment penalty of 1/2% per month up to a maximum of 25%. You will also be charged interest at the current rate of 3%. The late payment penalty will not be charged for the period of the extension if you have paid at least 90% of your tax by April 17, 2012.
If you estimate you are due a tax refund for 2011 you technically do not need to file the extension as there is no late filing penalty if there is no tax due. However, if there is any uncertainty over the refund you may still wish to file form 4868 in case you end up with a tax liability when the final return is prepared.
If you would like assistance with filing your extension call Mark Smith on (480) 363-4808.
Disclaimer – This article does not constitute personal tax advice to the reader and is only offering general information. You should seek professional advice for your own situation as the most appropriate tax planning depends on your personal and unique circumstances.