How to Extend Your Individual Tax Filing Deadline

If you are unable to file your 2010 individual tax return by the April 18, 2011 due date, an automatic extension will need to be filed by April 18. The automatic extension (Form 4868, Application for Automatic Extension of Time to File U S Individual Income Tax Return) will allow you to avoid a failure-to-file penalty as long as you file by the extended October 17, 2011 deadline.

The IRS wants you to make a payment with your automatic extension for what you think you will owe. They will gladly refund any over payment after you file your return, but if you under pay, you will be assessed a failure-to-pay penalty.

The failure-to-pay penalty is 0.5% per month up to 25% of the late tax. As an example, if you owe $1,000 with your 2010 individual tax return, the failure-to-pay penalty would be $5 per month, assessed from April 18, 2011 until you file your return.

How do you know if you owe?

Of course, since the tax return has not been prepared yet, you don’t know if you owe. Generally, if your income, deductions and withholdings were roughly the same in 2010 as 2009, and you received a refund last year, you probably won’t owe for 2010. But you may owe if:

You were required to make quarterly payments in 2010 but did not make all the payments.
You (or your spouse if filing jointly) earned substantially more wages in 2010, especially if you did not increase your withholding allowances.
You received a lump-sum retirement distribution in 2010, especially if you are under age 59 ½.
You had new or one-time income sources in 2010, such as a second job, a new business, etc — especially if you did not have tax withheld from the payments.
You had capital gains from the sale of business property, investments or real estate.
You made a profit from self-employment or a business in 2010, and did not make quarterly estimated tax payments. (If you did not make a profit, don’t worry about this one.)
You have a child that turned 17 in 2010 (because the child tax credit goes away).
You have fewer dependents in 2010.

Yes, I think I will owe taxes for 2010.

Columbia CPA Group clients may contact our office for help in calculating a payment to send with the extension.

Or you may estimate the amount yourself as follows:

Multiply your extra income by your marginal tax rate. (If our firm prepared your taxes last year your marginal tax rate can be found on either of two worksheets found in the client copy of your tax return; just turn to either the Tax History Report or the Two-Year Comparison worksheet.)
If your extra income will be subject to self-employment tax multiply that amount by 13.3%. Clergy housing allowance may also be subject to self-employment tax.
Don’t forget Missouri. For your MO extension payment simply multiply your extra income by six percent (6%). The MO-60 must be filed to send a payment to Missouri. Otherwise, Missouri accepts the Federal extension.

If your bank balance is a limiting factor, you can simply choose an amount that you can afford to pay to minimize the potential failure-to-pay penalty.

More information

For more information, view the IRS instructions for Form 4868 http://www.irs.gov/pub/irs-pdf/f4868.pdf.