The IRS takes its deadlines seriously. That means that all tax returns, plus checks for any taxes owed, must be stamped or filed electronically by April 15 or bring on the penalties! But what if you don't have enough money to cover the taxes you owe? Should you postpone filing until you have the cash to cover your bill?
Here's what the IRS says:
- Always file on time, even if you can't pay the full amount that you owe. If you don't, you are charged a failure-to-file penalty of 5 percent of unpaid taxes for each month you are late, up to 25 percent of unpaid taxes.
- Pay what you can and contact the IRS to explore payment options.
- You will only be charged 1/2 of 1 percent of the balance you owe on your unpaid taxes each month. That's much better than the failure-to-file penalty.
The IRS does offer "automatic" filing extensions of up to six months, but you still have to file for an extension by April 15. Plus — and this is the most important detail — a filing extension is not a payment extension! You still have to pay any owed taxes — or your best estimation thereof — by April 15 [source: IRS]. You will be charged interest on any unpaid taxes after that date.
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