Today is the deadline to file income tax returns, but it’s also the deadline to file for an extension.
Taxpayers who won’t be able to file a complete return still have to file an extension and submit an estimated payment within 90 percent accuracy.
Online software companies such as TurboTax and TaxAct offer to file extensions for free, but failure to file an extension or remit estimated payment could bring a costly penalty.
The penalty for not filing is normally 5 percent of the unpaid balance, compounded monthly. The penalty for not paying is normally 0.5 percent of the unpaid balance, compounded monthly.
For taxpayers who demonstrate financial hardship ranging from unemployment to reduced income, the Internal Revenue Service has Form 1127, which provides an extension of time for payment.
Bob Meighan, TurboTax’s vice president and a certified public accountant, said if people cannot pay by the deadline and can meet hardship requirements, the extension to pay is designed to reduce interest accumulation on their tax debt.
“It’s directly as a result of the economic difficulties so many people are facing now,” he said. “That’s the kinder, gentler IRS.”
Submitting an extension to file doesn’t actually save most taxpayers that much work, said H&R Block’s district manager, Steve Harvey:
“In order to estimate your payment, you basically have to fill out a return. It’s not that much more work to just file.”
An extension gives taxpayers with complicated deductions or other situation requiring a long time to complete their return until Oct. 15 to file.
H&R Block will stay open late tonight to accommodate extensions or returns.
“We’ll be here till the last client is served,” Harvey said.