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File A Tax Extension – Tax Year 2011

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Are you running behind on filing your taxes and afraid you will not be able to make the dead line?  Don’t worry… I have two pieces of good news for you.

Tax extension info for tax year 2011

The first bit of good news is that the tax deadline for 2011 returns has been moved from the traditional date of April 16th to an extended deadline of April 17th – giving you an extra day to get your taxes done.  If you haven’t filed yet, I recommend using TurboTax Online – I’ve been using it for years and love it.  Read my TurboTax Review and don’t forget to check out the 10 most commonly missed tax deductions.

The second bit of good news is that you can easily file tax extensions for free and push your filing deadline back from April 17th, 2012 to October 15th, 2012 giving you an extra 6 months to file!

How to file a tax extension

I recommend one of several ways to file your tax extension.

  1. If you use TurboTax, you can file your tax extension using their online software.
  2. Download IRS form 4868 and mail it in
  3. E-file form 4868 using one of the IRS FreeFile companies.
  4. E-file form 4868 yourself using FreeFile Fillable Forms.

Don’t forget that you still have to pay at least 90% of your actual tax liability by April 17th, 2012 to avoid a late payment penalty. If you don’t know how much you owe then you can estimate, but if you estimate low you may be hit with the penalty, so I strongly advise taking the time to get solid estimate and send it in with your form 4868.

Lastly, be sure to file your request for an automatic extension by the April 17th, 2012 deadline to be eligible – and pay any total tax due by October 15, 2012 to avoid late payment penalties.

I may file an extension this year

Normally I file my tax return in the beginning of February, but for whatever reason have put it off until the last minute this year.  Last night I logged into my TurboTax Online and completed about 80% of my return so I should get it done in time for the April 17th deadline, but if I don’t I’ll simply file an extension and use the extra 6 months.

Are you going to file an extension this year?

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Estimated Tax Payments

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If you’re self-employed or owe more tax than was withheld from your earnings, you may need to pay quarterly estimated tax payments.

Income not subject to withholding (self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards) is paid by making quarterly tax payments to the fed.

If you will owe taxes of this sort you must make estimated payements by the quarterly due dates to avoid penalties.

How To Pay

The easiest way to pay is by using The Electronic Federal Tax Payment System (EFTPS). Just enroll online, enter your payment information, and have payments directly debited from your bank account.

Be sure to enroll a few weeks before your estimated payment is due because it will take the IRS a week or so to get your login PIN to your mailbox.

Estimated Tax Payments

To figure your estimated tax amounts (and to pay manually), use Form 1040-ES.

Who Needs to Pay

Any sole proprietor, partner, S corporation shareholder, or self-employed individual expecting to owe more than $1,000 in tax at year end will need to file and pay estimated tax.

How Much To Pay

They’re called “estimated taxes” because you must estimate how much you’ll owe based on expected earnings, deductions, and credits at year end.

If you’re confused or overwhelmed by estimating these numbers, don’t worry, just grab last years return and use it to guide you. Plug those numbers into the 1040-ES worksheet to calculate estimated tax due and figure quarterly payments. If your business is new just estimate the best you can and make adjustments as necessary.

Keep your estimates as accurate as possible to avoid penalties, but don’t worry about estimating perfectly; if you’re too high or low just complete another 1040-ES worksheet and adjust your amounts for the next quarterly payment.

Quarterly Payment Due Dates

Note: if you’re planning to use EFTPS for the first time, enroll a few weeks before the first payment due date so the fed has time to send your PIN via snail mail.

Estimated taxes are paid quarterly throughout the year and are due on the following dates:

  • April 17th, 2012
  • June 15th, 2012
  • September 17th, 2012
  • January 15th, 2013

Pay enough tax (typically 25% of total tax due for the year) by the due date of each quarter to avoid penalties.

You can also pay your entire tax bill on the first quarterly payment due date if you’d rather just get it all over with. I recommend paying quarterly so you can keep the money liquid and/or draw interest on it as long as possible.

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References and Resources

Don’t Forget To Do Your Taxes

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As a final reminder, the deadline to file personal federal tax returns is Tuesday, April 17th.  This is also the deadline for state returns and tax extensions.

Ways to file?

File manually – Download the forms from the IRS website, fill them out, and mail them in.  This is the slowest way to file. File online – Finish faster and make it a whole lot easier on yourself by using an online tax program and efiling your return.  Another advantage to using these products is that they include audit reviews to help you avoid an IRS audit.

IRS Free File – If your 2011 AGI was $57,000 or less you qualify for the IRS Free File program where you can choose from several different companies to file your federal return (some also support state retuns.) Individual company offers are limited so be sure to review the criteria before choosing. If you go this route I recommend using the IRS “Help Me Find a Company” tool to find a program that works best for you.

TurboTax - Choose Easy RECOMMENDED Save 25% on H&R Block At Home Online Premium

I have my taxes about 90% done and will be finishing them up this weekend.  Thank goodness.

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Resources