Picture this: You’re DIYing your taxes like usual, but suddenly the realization hits you — you’re not getting a refund this year. Instead, it looks like you’ll owe a hefty chunk of change to the IRS. What can you do?
An extension to file, not an extension to pay
If you end up stuck with a large, unexpected tax bill, your first instinct might be to file for a tax extension. This should give you more time to pay your taxes, right?
Unfortunately, that’s not the case.
While a tax extension gives you six more months to file your income tax return, it does not give you more time to pay any tax owed — that is still due by the tax filing deadline, April 18, 2023. If you don’t pay your tax bill by then, you could face paying penalties and interest.
To request an extension, you’ll need to file Form 4868. TaxAct® can help you do this when you e-file with us.
What happens if I file a tax extension and owe money?
When you file Form 4868 for an extension, you must estimate how much tax you owe. The form will help you approximate your tax liability, so don’t worry; you won’t be pulling numbers out of thin air.
If in doubt, shoot for overpaying any tax due rather than underpaying. You’ll get any excess tax payments back as a tax refund when you officially file your return.
What should I do if I can’t pay my tax liability upfront?
You aren’t out of options if you don’t think you’ll be able to pay your tax bill by April 18 (for tax year 2022).
The IRS offers short- and long-term payment plans for those who need them. To request a payment installment agreement, you’ll just need to fill out Form 9465. TaxAct can help you do this electronically when you file with us. You’ll have several options to pay, such as setting up monthly Electronic Funds Withdrawal or requesting payments be taken out of your paychecks.
Once you’ve filed a payment installment agreement request, the IRS should let you know within 30 days if your request was approved or denied.
Do your best to file and pay on time
Even if you set up a payment plan with the IRS, you’ll still be charged a fee and likely have to pay interest on your tax owed until your bill is paid. With that in mind, the best thing to do would be to file and pay by April 18 if you can swing it! You can file a tax extension for free with TaxAct.
This article is for informational purposes only and not legal or financial advice.
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