Tick, tock. It is Friday; the weekend is upon us!
And so is Tax Day, April 15th.
The deadline is less than 72 hours away, and this Monday may feel like a countdown to doomsday for taxpayers who need an extension and owe taxes.
The stroke of midnight on April 15 doesn’t have to spell disaster if you know the rules for filing your extension and paying your income tax.
Let’s unravel the mysteries
- Filing an Extension
- Your tax payment obligations
- Your cost if you do not pay 100% of your tax on April 15th
Filing for More Time: The How-To
The big question: “I need to file an extension. How do I do it?”
- Submit Form 4868 to the IRS before the April 15th deadline.
- Electronically through most tax software programs or;
- Your Savvy CPA handles this for you.
The magic of this form?
Moves the filing deadline to October 15th.
Paying Your Taxes: Do I Have To?
Now, onto the elephant in the room: “Do I have to pay all the tax now?”
In a word, YES.
- The extension buys you time to file, not to pay.
- Estimate what you owe and pay by April 15th to avoid penalties and interest.
Think of it as leaving a deposit for a hotel room you haven’t checked into yet; it ensures your reservation doesn’t get canceled.
Penalties: Sure, I want to throw money away, said no one!
“What will it cost me?”
If you miss the payment deadline, you’ll be subject to a late payment penalty of 0.5% per month on the unpaid tax amount.
PLUS—there’s also interest compounding daily.
The rate? The federal short-term rate plus 3%. (7.89% April 2024)
It’s like a snowball rolling downhill, growing faster with every moment of delay.
Strategize to Minimize
The key to minimizing costs?
Strategize. If you can’t pay the total amount,
- Pay what you can by April 15th to reduce the penalties and interest on the balance.
- If you need more time to pay off your tax debt, consider setting up a payment plan with the IRS. It’s like negotiating a peace treaty with the IRS—everyone’s happier when there’s a plan in place.
Have questions about deductions?
With Tax Day looming, remember that extensions are a tool, paying what you owe is a must, and making the most of your deductions is your right.
You may be wondering:
- Can I deduct the bill for the happy hour cocktails watching the Texas sunset I enjoyed with my spouse last night?
- Can I put my luxury car through the business?
- Can I fly first class to a conference and write it off?
Our Savvy CPA would answer yes, yes, and yes. (With the proper documentation)
Paying less in tax doesn’t have to be complicated.
(And it’s not illegal either)
CLICK HERE to read more about deductions.
Navigating the Maze with a Pro
Still feeling overwhelmed?
Perhaps you are!
That’s where a Savvy CPA Team comes in. Think of them as your guide through the tax jungle, slashing through red tape and deciphering the arcane runes of tax law.
With their expertise, you can navigate this season’s challenges with confidence and emerge on the other side, financially wiser and ready to take on the world.
Want to hire us? Then Click HERE to SCHEDULE an APPOINTMENT
The opinions expressed in this material are for general informational purposes only and are not a substitute for professional advice. Individual circumstances do vary. Independent Financial Group (IFG) does not give tax advice. IFG Registered Representatives (RR) do not provide tax advice while acting as a RR.
