For 2018, the federal income tax filing deadline has been deffered to — April 17 — but it’s now less than 1 week away! So, if we haven’t received your documents or filed your tax returns by now, you may be on an extension or getting extended. If you are considering an extension then beware of these potential errors.
Filing for an extension
Filing for an extension allows you to delay filing your return until October 15, 2018 for 2017 individual, corporate, partnerships, and single member tax returns.
While filing for an extension can provide relief from April 17 deadline stress and avoid failure-to-file penalties, there are some possible dangers:
- If you expect to owe tax, to avoid potential interest and penalties you still must (with a few exceptions) pay any tax due by April 17.
- If you expect a refund, remember that you’re simply extending the amount of time your money is in the government’s pockets rather than your own. (If you’re owed a refund and file late, you won’t be charged a failure-to-file penalty. However, filing for an extension may still be a good idea.)
Meeting the April 17 deadline
The IRS considers a paper return that’s due April 17 to be timely filed if it’s postmarked by midnight. Sounds straightforward, but here’s a potential pitfall: Let’s say you mail your return with a payment on April 17, but the envelope gets lost. You don’t figure this out until a couple of months later when you notice that the check still hasn’t cleared. You then refile and send a new check. Despite your efforts to timely file and pay, you can still be hit with both failure-to-file and failure-to-pay penalties.
To avoid this risk, use certified or registered mail or one of the private delivery services designated by the IRS to comply with the timely filing rule, such as:
- DHL Express 9:00, Express 10:30, Express 12:00 or Express Envelope,
- FedEx First Overnight, Priority Overnight, Standard Overnight or 2Day, or
- UPS Next Day Air Early A.M., Next Day Air, Next Day Air Saver, 2nd Day Air A.M. or 2nd Day Air.
Beware: If you use an unauthorized delivery service, your return isn’t “filed” until the IRS receives it. See IRS.gov for a complete list of authorized services.
Avoiding interest and penalties
Despite the potential pitfalls, filing for an extension can be tax-smart if you’re missing critical documents or you face unexpected life events that prevent you from devoting sufficient time to your return right now. We can help you estimate whether you owe tax and how much you should pay by April 17. Please contact us if you need help or have questions about avoiding interest and penalties.
