Filing your taxes is hardly an easy undertaking, even if you consider yourself to be fairly familiar with tax laws and are well versed in financial lingo. This is why waiting around until the last minute to file your taxes is never a great idea, as you could potentially run into difficult questions or filing obstacles when reviewing your records prior to the April 15 deadline.
While the Internal Revenue Service (IRS) offers numerous resources and programs to filers that are designed to help streamline the process — from online filing to electronic tax guides — for some borrowers, these simply aren't enough. Often, just navigating the IRS website itself can be daunting for many taxpayers that will have them sitting on their computers well past midnight on the 15th.
It's not only an issue for you, the taxpayer, to contend with the penalties of filing late, but the IRS must work harder when it doesn't receive your taxes on time. This is why if you suspect that you won't be able to get your taxes filed before April 15, the IRS will in some cases allow you to file for an extension of up to six months to get your documents in order.
An extension doesn't mean you're off the hook
There are a few stipulations to extending your own personal filing deadline via Form 4868 — the official application provided by the IRS. For instance, if you get approved for an extension, that doesn't mean you won't have to pay Uncle Sam on April 15. The government still requires you to make a payment that accounts for at least 90 percent of the total estimated fees if you want to avoid receiving a penalty once all documents are filed.
Can't pay it all now? Give what you can.
If you don't have enough funds to cover the money you owe the government, the IRS will still be willing to work with you in order to avoid penalties. By paying at least a portion of the money owed by April 15, you avoid significant fees, though interest will still accumulate on the money it has yet to receive.
If you don't file your taxes on time it has the potential to negatively affect your credit score, which will make borrowing money much harder for you in the future. When you are through filing for your tax extension, look into enrolling in an identity monitoring program that will alert you to certain financial activity taking place in your name. This way, lenders won't be apprehensive about working with you when they go over your credit report.