Last spring, when the deadline for filing taxes came on April 15, about 13 million taxpayers had chosen to take the automatic six-month extension that is allowed under federal tax law.
That was nearly six months ago. In this post, we will provide a reminder that if you took a six-month extension, you only have until October 15 to get your taxes filed. We will also elaborate briefly on the options you have if you still can't pay your tax bill in full, even after an extension.
First of all, it's worth noting what an extension does and doesn't do. An important thing it does do is enable you to avoid the stiff penalty for failure to file income taxes.
To be sure, there is also a penalty for failing to pay taxes on time. An extension generally does remove this penalty. But the failure-to-file penalty is generally much more than the failure-to-pay penalty.
For many taxpayers, a key reason to file for a six-month extension is therefore to take advantage of the protection it offers against the failure-to-file penalty.
If you request a timely extension and pay at least 90 percent your tax bill by the time you make the request, an extension may even be able to protect you from the failure-to-pay penalty. But to take advantage of this aspect of an extension, you will have to pay your tax bill in full by the time the extension expires.
For tax returns that were due on April 15, the six-month extension expires on October 15.
Of course, when the extension expires you still have options. We discussed some of the basic options in our August 19 post. These include seeking an installment agreement or an offer in compromise (OIC).