Filing your taxes can be a complicated process. There are all kinds of laws and tax forms you need to be aware of as a taxpayer to make the most out of your filing. Sometimes dealing with all those documents can be stressful and you may need to file an extension. Of course, there are also other reasons to file an extension. If you need to make a late tax filing in California, you should speak to a Roseville tax lawyer immediately. The attorneys of NewPoint Law Group are here to explain how to make a late tax filing in California.
How to File for a Tax Extension
There are a few ways taxpayers can request an extension, such as:
- Filing a Form 4868 (“Application for Automatic Extension of Time to File U.S. Individual Income Tax Return”) online or by mail.
- Requesting an extension through a paid tax preparer.
- Filing an extension with tax preparation software.
However, if you were filing a Form 4868 by mail, the form must have been mailed to the IRS with a postmark on or before April 17. You should also remember that filing for an extension does not extend the amount of time you have to pay the tax bill. The tax bill you owe with an extension should be 90% of your actual tax liability. This payment will protect you from a future failure-to-pay penalty.
7 Reasons to File Your Taxes Late
If you filed a timely extension with the IRS, your filing due date should be extended to October 17, 2018. The IRS can generally grant a tax filing extension if you complete and submit Form 4868 by the deadline.
The IRS may not be concerned about the reason you applied for a late filing, but here are seven reasons that you may be:
- Unexpected Life Issues – There may be several different events that interfered with filing your taxes in April. Issues like illness, a new job, divorces, birth of a child, natural disasters, death in the family, and many other things you could not possibly predict can delay your tax filing.
- Missing Information – The IRS has altered the due dates for certain filings like 1099s for small businesses, S-corps, and partnerships to attempt to get documents to taxpayers expediently. S-corps and partnerships are also eligible for automatic extensions.
- Examine IRA Conversions – Getting a tax filing extension can provide you with more time to review IRA conversions to a Roth IRA. Changes in the market after you converted to a Roth IRA may prompt you to return to a regular IRA.
- Retroactive Tax Laws – If any tax laws occur after the April filing date it could affect your tax return. If you feel there is an imminent tax law that could affect your return, you should consider filing an extension to see how that pending law pans out. A filing extension may save you a few headaches if the law would have required you to amend your tax return.
- Avoiding Tax Audit – The IRS has a habit of beginning tax audits early in the year to meet their auditing targets. Therefore, it may be possible that filing later in the year would reduce your chances of being audited.
- Preserving Tax Refund – If you do not file your tax returns by the extended deadline of October 17, 2018, there is a three-year deadline for receiving a refund from the IRS. If you originally filed for a filing extension, you will receive an extra six months to claim your refund.
- Funding Retirement – If you are self-employed, consider looking at a SEP-IRA, solo 401(k) or Simple-IRA plan. The extension provides you with an additional six months to find ways to fund these plans.
Consequences of Filing a Tax Return Late
Filing your tax return late has its advantages, but there are also some downfalls. The IRS can impose interest and penalties on late tax filers. This may add thousands of dollars to a person’s tax bill. The IRS can also:
- Require late filers to sell, mortgage, or take out a loan to cover their tax bills
- Garnish wages
- Levy bank accounts
- Seize assets
- File a federal tax lien, which has negative credit rating consequences
The IRS can charge a delinquent penalty on unpaid taxes if a tax return is not filed on time. The penalty equals 5% of the taxes due per month for every month that the payment is late, up to 25%.
California Tax Attorneys Can Help You File Your Returns
If you are considering filing your tax return late, you should speak with an experienced attorney. The Roseville and Sacramento tax attorneys at NewPoint Law Group are available to help you resolve your tax problems. Our tax lawyers have aided clients across California and would be happy to assist you. To schedule a free, confidential consultation, call us at (800) 358-0305.