Need a tax extension? Or have no money to pay?

June Walker, tax and financial advisor to the self-employed, always has great advice when we need it. With the tax deadline coming up next week, June deals with a few problems "indies" like you might be facing:

Need an extension?

June says you don't need a reason to file your return after the April deadline. You can wait as late as October 15!

Ignore the old husbands' tale that filing an extension triggers IRS computer screens to flash "Audit this return!" Not so. An extension gives you more time to collect and review your material. And, even if you have your return completed by the end of March, it's better for you to hold that return for a little marination — especially in these turbulent economic times. Read more here.

No money to pay your taxes?

June says that lots of indies run into this problem, and the key is understanding your options and making the best decision possible based on them:

The IRS imposes penalties when you don't do what you are required to do. Among those penalties are late filing penalty and a late payment penalty. You do not want to incur both if you don't have to.

Avoid the late payment penalty by filing on time. Even if you don't have the money to pay your tax or to pay all of your tax. Pay as much as you can.

After the IRS receives your tax return you will receive a notice for balance due. If you have the money by then, pay the balance due. If not you may set up installment payments with the IRS. Read more here.

Getting a refund?

If you’re getting a refund, or have extra unexpected money as you finalize your finances, what better use than investing in yourself and the growth of your business? Sign up for the Creative Freelancer Conference. The early bird registration is open until tax day (April 15th).

One thought on “Need a tax extension? Or have no money to pay?

  1. Wes Masters

    One thing to add: your best option is to file an extension online. That way you’re guaranteed to get a response from the IRS and can re-file if your request was rejected. If, on the other hand, you choose to send the IRS your request through the mail, you will never hear anything. That means it may never get to the IRS or it could be rejected. That will mean you’re accumulating late filing penalties without even knowing it.