Your 2015 Tax Filing Extension

IRS tax formsRequesting a tax filing extension is relatively easy if you cannot complete your individual income tax return on by April 18, 2016. You have until April 19 to file a tax return if you live in Maine or Massachusetts.

You need, however, to understand the IRS rules and regulations. The following information will demystify the way the tax filing rules work and provide key points specifically about filing an extension for 2015.

Using IRS Form 4868

A request to extend the April 2016 filing deadline is free and will be automatically granted for six months or until October 17, 2016, if you submit your request for a filing extension before the original filing due date. You can submit your application online or by mail.  The reference to instructions for IRS Form 4868 below provides Post Office address information. If you are a US citizen or resident out of the country on April 18, 2016, you have an additional two extra months to file your return and pay any outstanding tax due.

You do not have to file a tax filing extension electronically if you make a timely tax payment online using Direct Pay, a debit or credit card, or the Electronic Federal Tax Payment System. When you pay by phone or online, make certain you record the time, date, and confirmation number for your files.  Your partial or full payment of any outstanding 2015 taxes will result in an automatic tax-filing extension until October.

The reason an electronic payment triggers the automatic submission of a tax filing extension is because IRS Form 4868 does not postpone payment. It only applies to the timely filing of your tax return. The IRS charges interest on any 2015 tax balance after the original April 18 filing due date.

There are potentially two different penalties, a late payment penalty, and a late filing penalty, if you do not submit an individual tax return on time and do not request a tax filing extension. You must pay a late payment penalty regardless of whether or not you have a tax filing extension. The IRS calculates 1/2 of 1% interest on any taxes owed after April 18 up to 25% if you owe any taxes in 2015.

A separate late filing penalty of 5% of the taxes due will be assessed up to 25% if you have not filed a request for an extension.  Your penalty assessment after 60 days will be the smaller of either your entire balance due or $135.

The tax filing extension ONLY applies to the late filing penalty. To qualify for the tax filing extension, IRS instructions for Form 4868 state that you must estimate your 2015 taxes on Line 4, any tax payments already made on Line 5, and the amount you are paying when you request the filing extension toward the balance due on Line 6.

You are not required to enclose a tax payment with the IRS Form 4868. The amount of taxes paid as of the original filing deadline of April 18, 2016, will limit the interest you will eventually owe.  Complete Line 8 if you are out of the country.

If you live in a state that has an individual income tax, carefully review state filing requirements. Some states like California, are aggressive especially when delays in proper filing eventually led to a collection issue.  Follow filing rules and requirements at both the federal and state levels. If you cannot file your individual income tax return on time or pay a tax bill, seek assistance in contacting a tax authority before they contact you.

Health Care and Your 2015 Tax Filing Extensions

The Affordable Care Act (ACA) Penalty applies to those individuals who fail to arrange a health care insurance plan for themselves that meets minimal benefits requirements.  Tax-filing extensions are a possibility for those receiving either IRS Form 1095-B or 1095-C but are not necessary. You do not need to attach original documents from the Form 1095 family to file your 2015 tax return.

You use one of the 1095 family of health coverage material (1095-A, from the Marketplace, 1095-B, from your insurer, or 1095-C, from your employer) to file accurately your 2015 tax return. The appropriate 1095 document is proof you have correctly reported your health care coverage for 2015 and will not have to pay a Shared Individual Responsibility penalty payment.

Obtain the health-related information documents from appropriate parties like the Marketplace, your insurance provider, or your employer as soon as possible and file them with your paperwork so that you can prove 2015 health care insurance coverage.

The IRS has extended the 2015 reporting requirements for Form 1094-B, Transmittal of Health Coverage Information Returns and 1095-B, Health Coverage, to May 31, 2016, from February 29, 2016. The 2015 IRS Form 1095-C, Employer-Provided Health Insurance Offer, and Coverage is now due March 31, 2016, from January 31, 2016.  The IRS has provided additional guidance in their Notice 2016-04 cited in our Income Tax Takeaway section below.

Free Resources Can Help You

Other stuff to help prepare taxes before the deadline

You can file online for free if you meet both AGI (less than 60K) and age thresholds. However, this statement is misleading. The 62K+ category on the FreeFile web page is actually a FreeFilable Form.

 

Summary 

You have until April 18, 2016, to file your 2015 IRS Form 1040 individual tax return.  Failure to file your individual income tax return or pay taxes you owe are serious issues. Don’t ignore the situation and hope a tax authority will forget about you. The IRS charges both interest and penalties on any outstanding tax bill.  States are also relentless in their tax collection efforts. They issue a similar series of collection notices and then pursue enforced collection procedures including liens, levies and wage garnishment.  California, for example, will continuously seize up to 25% of your disposable income using an Earnings Withholding Order for Taxes or EWOT.  If you are a legal resident in this country or US citizen, do not underestimate the power of government agencies to collect what they have assessed you owe in unpaid taxes, interest, and penalties.  Seek an experienced tax practitioner to help you resolve your tax issues.

Income Tax Takeaways

IRS Form 4868, Application for Automatic Extension of Time to File US Individual Income Tax Return

Information about Online Payments

Extension of Time To File Your Tax Return

Internal Revenue Bulletin Notice 2016-04

Individual Shared Responsibility Provision

California EWOT https://www.ftb.ca.gov/professionals/taxnews/Editions/April-2016.shtml

6 Great Resources for Preparing Your Taxes via 6 Great Resources for Preparing Your Taxes

Freelancers, Pay Your Quarterly Taxes (or Prepare to Suffer) — MEL Magazine via Freelancers, Pay Your Quarterly Taxes (or Prepare to Suffer) — MEL Magazine

Attribution:

Thank you, MHG Insurance Brokers for your blog post, An Extension You Should Be Aware of When Filing Your Taxes, via An Extension You Should Be Aware of When Filing Your Taxes

Consult a qualified tax preparer.