Note an extension filed with the federal government does not automatically extend your Utah state return. However, the state of Utah normally accepts the filing criteria for extensions found on the Internal Revenue Service tax return. If you have applied for a federal extension, then in most cases, there will be no need to apply for a Utah extension. You will only include a copy of the federal extension form when you file your tax return in Salt Lake City.
Understanding Tax Extensions
Mostly, it is always good to understand what a tax extension does and does not do. An extension is a way of providing more time for filing returns but does not extend the time for payment of taxes owed. If you are going to owe money, you should still estimate and pay as much of the amount due as you can by the original deadline to avoid possible penalties and interest.
It provides an additional six months for filing to most people. It means that instead of the usual April 15 deadline, you would have until October 15 to file your completed return.
How to Request an Extension
You can request an extension in any of the following ways:
1. File IRS Form 4868: This is the formal application for an automatic extension of time to file your individual income tax return. You can download the form from the IRS website and mail it in.
2. E-file: Most tax preparation software programs will let you e-file an extension request. It’s usually the quickest and easiest way to do things.
3. Pay all or part of your estimated income tax due: You specify the payment is for an extension when you pay all or part of your estimated income tax on the internet. No separate form needs filed; this technique automatically provides an extension.
4. Through a tax professional: In case you have an accountant or paid tax preparer, they can file for an extension on your behalf.
Utah State Tax Extension
It’s important to note that an extension filed with the federal government does not automatically extend your Utah state tax return filing deadline. However, in general, Utah will follow the federal extension filing requirements. If you have filed for a federal extension, in most cases, you will not need to file a separate request for an extension from Utah. You will simply attach a copy of your federal extension form to your Utah return when you file.
Reasons to File an Extension
There are plenty of good reasons you may need to file an extension:
1. Missing Documents: If you’re missing big tax documents—like a K-1 from a partnership or S-corporation—the extra time allows you to keep waiting for and processing that information.
2. Life events: Such events may include relocation, divorce, or the death of someone in the family—anything that’s going to screw up your filing.
3. Business complexities: If you’ve got a business or complex investments, you may need more time to ensure you properly report all income and deductions.
4. Natural disasters: If you live in an area affected by severe weather or other disasters, the IRS will often grant automatic extensions.
5. Overseas residents: If you’re a United States citizen residing outside of the country, you’re usually granted two months of automatic extension, and can request more if needed.
Common Misconceptions
OK, let’s clear up some common misconceptions about tax extensions:
1. “I don’t have to pay yet because I got an extension.” Wrong. An extension to file is not an extension to pay. Be sure to estimate and pay any taxes due by the original deadline to avoid penalties.
2. “Filing an extension increases my chances of being audited.” Evidence is lacking for this conclusion. In fact, taking the time to file a complete and proper return could lower your audit risk.
3. “I need a good reason to file an extension.” The IRS does not ask for a reason when requesting an automatic extension.
4. “Extensions are only for complicated returns.” Anybody can get an extension, no matter how simple or complex their taxes may be.
Possible Penalties
While an extension can be a useful tool, it is also important to consider the potential penalties that occur for failure to file or pay on time:
1. Late filing penalty: Should you have taxes due and miss the date for submitting a return or applying for an extension, you may be hit with a penalty of 5% for each month or part of the month that the return is late, based on unpaid taxes, up to a maximum of 25%.
2. Penalty for late payment: Even when you file an extension, you may be liable for the penalty of 0.5% of your unpaid taxes per month or part of a month the tax remains unpaid, up to 25%.
3. Interest: The IRS charges interest on unpaid tax from the date due of the return until the date of payment, even if you have an extension.
Tips for a Smooth Extension Process
1. Estimate your tax liability: Even though you cannot file a complete return, calculate your estimated tax due to the best of your ability.
2. Pay as much as you can: If you can’t pay the full amount you expect to owe, pay whatever you can to minimize potential penalties and interest.
3. Remember state taxes: Remember that you must address the state as well as federal income taxes when filing for an extension.
4. Keep a record: Make a copy of your extension request and payments made.
5. Mark your calendar: Note the extended deadline so that it does not slip your mind.
What to Do After Filing an Extension
Once you have filed an extension, use your additional time wisely. 1. Catch-up on missing documents: Get hold of any missing forms or other receipts which you need to finish your return.
2. Organize your records: Use this as an opportunity to organize and file all your documents for tax obligations.
3. Think about professional assistance: Consider hiring a professional to help you with the filing of your tax return.
4. Stay on the lookout: Be alert to any changes in the law on taxes that may affect your return.
5. File as soon as you can: Just as soon as you are ready, don’t wait for the extended deadline.
Local Resources
There are several resources provided in our community that would enable one to prepare and file taxes. These include:
1. Volunteer Income Tax Assistance: This program provides free tax help to persons who generally make $56,000 or less, persons with disabilities, and limited English-speaking taxpayers.
2. Tax Counseling for the Elderly: TCE provides free tax help for all taxpayers, particularly those who are 60 years of age and over.
3. Local libraries: Most libraries will carry tax forms and occasionally host tax preparation aid events.
4. Community centers: Some community centers will offer a class on taxes or even individual consultations.
Conclusion
While filing for an extension can give some more precious time when it is really needed, how the procedure works and what it does and does not entail must be understood. An extension of filing is not equal to an extension of time in which to pay; hence, one should estimate and pay any taxes due by the due date. Use the additional time wisely for collecting necessary documents, organizing your records, and preparing an error-free return.
Knowing what options are available to you and planning ahead of time can make a world of difference when the process comes. Whether you have a more complex tax situation, wait for important documents, or even extra time needed to ensure accuracy—an extension is one of the more useful tools in your tax preparation toolkit.
Keep in mind that every taxpayer’s situation is different. If you have any questions regarding your return or how to go about dealing with the extension process, consider consulting with a qualified tax lawyer Salt lake city who can help provide personalized advice for your situation.
