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Thinking of filing for an extension? Some things to keep in mind

Twelve million taxpayers is a lot of taxpayers. After all, it's more than the population of all but six states.

But 12 million is indeed the number of taxpayers that the IRS expects to file for extensions by the federal tax-filing deadline of April 15.

In this post, we will take note of some of the basic points about the extension procedure.

First of all, there is of course a form involved. That form is Form 4868.

The extension is supposed to be hassle-free. There is no need to explain why you're requesting an extension. That is why the term "automatic" is often used in connection with it.

The duration of the extension is six months. That would give you until October to complete your federal taxes.

Though no reason must be given for filing for the extension, there are certainly common reasons why taxpayers make use of the procedure.

One of those reasons is how document-intensive tax preparation can be. This is especially the case for taxpayers with more complicated returns. It can take time to gather information regarding investments and other transactions that impact your taxes.

To be sure, humans being human, procrastination is also often involved when taxpayers file for an automatic extension.

Keep in mind, however, that a six-month extension doesn't eliminate the need to pay any tax you may owe. An extension can prevent a tax penalty for late filing, but you could still owe a late-payment penalty.

That is why it may make sense, if you can't file by April 15, to make an estimate of what you think you owe and pay it if you can.

Source: The New York Times, "Running Late? Push Federal Tax Day Back to October," Ann Carrns, April 1, 2014

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