You filed a Federal Form 4868 requesting a six-month extension to file your individual income tax return, you may be wondering what’s next. Filing the extension on time by April 18th of this year extended the final due date of your tax return until October 16th. The extension granted you an additional six-months to provide your CPA (hopefully GKG) with your 2016 tax information and documentation so that a complete and accurate tax return can be prepared and filed for you.
Filing that extension in April protects you from penalties for not filing your tax return timely but it does not alleviate your responsibility to pay income taxes on time. Filing that tax extension in April does not extend the period of time you have to pay your income taxes, it only extends the time you have to file your tax return but the taxes you owe for 2016 needed to be paid by April 18th. If you determined that you owed income tax for 2016, the payment needs to be paid along with the extension in April. We recommend that 90% of your estimated income tax be paid with your extension. If you did not submit a sufficient payment with your extension back in April, the IRS will assess interest and penalties for late payment of income tax and can disallow your extension and assess you late filing penalties as well.
Even if you think you might not be able to pay your taxes when your return is finally due in October, you should still file your tax return. If you can’t afford to pay the taxes you owe at that time, the IRS offers simple installment payment plansif you owe less than $50,000. The IRS advises to pay what you can with your return and then request an installment plan for the remaining balance. The IRS has made it easy to request the installment plan and taxpayers can set up a monthly payment by completing Form 9465 (Installment Agreement Request) and submitting it with your tax return. You really should involve your CPA in this installment plan request.