The tax deadline is less than a week away. Instead of using a bunch of clichés about lights at ends of tunnels and finish lines, I’ll jump right to the point (after all, we need as much time as possible to finish our taxes).
There are millions of Americans each year that are not able to finish and file their taxes by April 15th. Because of this, the IRS offers the option of filing an extension (Form 4868), which extends your filing date to October 15th. Good news, right? It is, and yes, TurboTax can help. But first, there are a few things you need to know.
The most important piece of information to keep in mind is; if you think you’re going to owe, you still need to pay by April 15th in order to avoid any late penalties. Filling an extension with the IRS only allows you to postpone when you actually file your return, it doesn’t mean you can pay later as well. This is important, because the penalty could be up to 25% of your tax bill. The actual late payment penalty is ½ of 1% of any tax due (not your total taxes due, just what you haven’t paid by April 15). This will be charged each month the tax remains unpaid, up to a maximum of 25%.
TurboTax has a couple of ways to help you file an extension. You can file an extension from TurboTax itself. Just open it up, type “Extend time to file” in the FIND box and it’ll take you to the correct screen to fill out Form 4868 (Application for Automatic Extension of Time to File). If you use TurboTax to file your extension, you’ll need to print and mail the form.
If you want to file Form 4868 electronically, TurboTax offers Easy Extension for free! Follow this link:
It’s got a slick design and makes the process as painless as possible.
So you’re probably asking, what if I don’t know if I’m going to need to pay or not? We’ve got you covered there too. Use TaxCaster that TurboTax provides for free to help you estimate your taxes.
Remember, although extremely useful, TaxCaster is to help you estimate your taxes, it doesn’t actually do them for you (you’ll need TurboTax for that).
And finally, to be as accurate as you can be, you’ll need to have some information with you when you fill out Form 4868. Here’s a quick list of the possible things you’ll need:
* Your spouse’s (if applicable) as well as your own SSN and Date of Birth
* Your address
* A copy of your 2007 tax return (for your AGI and tax liability from last year)
* How much money you have already paid in taxes for 2008
* Your 2008 tax liability (See below for a quick explanation of this)
* Your bank account and routing number (if you owe taxes)
* Your User ID and password for your account on TurboTax.com (if you have one)
Figuring Out Your 2008 Liability:
The Tax Caster will calculate your estimated taxes based on the following information:
* Taxes withheld by your employer(s) on your W-2(s) (Box 2 of your W-2)
* Estimated taxes you sent the IRS
* Various Credits
If your tax situation hasn’t changed that much from last year, you may be able to use last year’s return to help you estimate whether or not you owe. If you owed, send in at least the amount you paid last year (don’t worry, if it turns out that you actually owe less, the IRS will return the balance). You can find what you owed last year on:
* Line 76 of the 1040
* Line 46 of the 1040A
* Line 12 of the 1040EZ
I know I’ve talked a lot about determining whether or not you owe. For those of you fortunate enough to expect some money back, there really isn’t a penalty for filing late. Since the penalty is a percentage of what you would owe and, since you don’t owe, there isn’t a penalty. But don’t wait too long—the longer you wait, the longer you go without getting your money. And, if you don’t file your return within three years, you won’t get a refund.
Finally, don’t forget about your state return. States often charge a similar penalty as federal for late filing. Some states don’t require you to file an extension as long as you complete a federal extension (but there is a voucher needed for each state). TurboTax has all the state extension forms for you to file manually. Easy Extension, however, does not, so keep that in mind.
For more detailed information about filing an extension, please see these following FAQs: