As April 15 approaches, tax filing season is in its home stretch. This might be causing you some level of anxiety. Given how the recent government shutdown and newly implemented tax reforms have impacted small businesses, organizing documents for 2018 may have become slightly more complicated.
Yet you don’t have to panic if you still haven’t gotten your paperwork in order, nor should you rush sorting your returns. With assistance from your CPA firm, there are several things you can do if you think you can’t file them before deadline.
Request an extension
As your accountant will likely tell you, the best step you can take is request an extension. This will push back the deadline for conscientiously sending all your returns to October 15.
The Internal Revenue Service (IRS) won’t require you to explain why you can’t make the original deadline. You simply need to fill out Form 4868 and make sure it reaches the IRS before April 15. You can send this document by mail, or electronically via your home computer or a Nashville tax professional.
Pay your taxes by the original deadline
Submitting this form, however, does not automatically grant you an extension. To get the extra time, you need to do the following:
- Estimate your taxes due for 2018
- Note the total amount on Form 4868
- Send your payment (partial or full) by April 15
In effect, earning an extension grants you more time to submit your returns. It doesn’t exempt you from paying taxes by the original deadline.
Understand the possible penalties
Whether you file for an extension or not, you risk having to pay fines:
- For late returns: The penalty is 5% of the amount of tax you owe for each month or part of a month your return is late. You could be charged up to 25% of the unpaid tax due. If you file more than 60 days after April 15, the minimum penalty is $205 or 100% of the unpaid taxes owed to the IRS, whichever of these is smaller.
- For not paying dues despite an extension: You will pay a fine that is usually 0.5% to 1% of any unpaid tax owed at the deadline. This will be charged each month the tax remains unpaid; again, you can be charged up to 25% of what you owe. You may also have to pay federal interest rates.
The good news? You could qualify for lesser late-payment penalties if you pay at least 85% of your actual dues by April 15.
Don’t let the complexities of the tax season become even more complex by not taking the responsible steps. Evan Hutcheson, CPA, LLC at your trusted Nashville CPA firm can assist you with whatever you need to sort out your taxes.
Sources:
Tax Day 2019: How to File a Tax Extension, BusinessInsider.com
What’s the Penalty for a Late Tax Return?, FoxBusiness.com
How Optimistic Should You Be This Tax Season? Ask Your Accounting Firm
