It’s April 15 and you don’t have W-2, or you are yet to receive Form 1099. What to do then? Many people feel that IRS will not notice such a small deficiency and they proceed to file the restore.
Not a excellent thought. You may be paying penalties as soon as the IRS will notice. There is no need to worry in such a situation.
There is an simple small term fix. Go file for a tax extension. It’s simple. It’s legal. And most vital, it does not initiate tax audit!
There is a simple form which allows you to apply for a six month extension to file your tax restore. It’s called Form 4868 and it is very simple to fill in. You can do it on your own; there is no need to take even the help of an accountant. The Form questions you basic details your name, address and social security number.
It also questions you to estimate the tax liability and in case any balance is due you are required to send it along with the Form. By making this payment if you are discharging 90% of your tax liability, then there is no worry at all. You are not subject to a late payment penalty or a late filing fee even. The Form is available very easily. Either you can take it from one of the IRS offices or you can order it by dialing the number 1-800-TAX-FROM (1-800-829-3676). At the time of filing the Form you’ll need information about your income tax restore.
You can file this Form online. On filing this Form you will get an acknowledgement.You must see that you file this form before the due date of your restore. You will get automatic extension.
And most vital thing is you need not give IRS indeed any reason for filing an extension. So even if you’re bone idle or you don’t want to reckon about filing that can be a valid reason for you! Form 4868 will give you time up to October 17 to prepare and send your restore. And mind you, this extension application is for the payment of money, You must pay your money before April 18 if you reckon that is due to the government. And one more vital thing, you can question for extension only once.
No more extensions there with. You must file before October 17. The IRS can slap a late filing penalty which is five per cent per month of the tax unpaid by the due date. And on the top of this there is a penalty for paying late.
The late payment penalty may be waived if you can show a reasonable cause for failure to pay. If 90 per cent of your real tax liability is paid before the due date and you may be considered to have a reasonable cause.
In any case you will be required to pay interest on the tax which is unpaid by the due date. This interest will continue until you pay the tax. Even if you say that you have a very excellent reason for non-payment, still as always interest is charged and recovered by the IRS.
Then there is one statute of limitation. It limits the power of IRS to audit your restore. It gives the IRS three years. So for filing the restore for 2010 which is due on or before April 18, 2011, the limitation date is April 15 to 2013. If IRS is powerless to audit you within this period, then it is prohibited from challenging the deductions you claimed.
The only cause for taking action beyond this date is if the IRS is successful in proving that you have committed a fraud. But then the burden of proof lies always on IRS. It must prove that you had the intention to cheat.
If you file an extension application the statute of limitations starts from the real filing date of the restore and not from the date of filing the extension. If you are abroad If you are a resident of U.S. or a resident and you’re out of the country on the due date for filing the restore, you’ll get automatic extension of two months for filing your restore. You need not file Form 4868.
So keep in mind that filing an extension does not initiate tax audit.
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