Personal Finance Word of the Day: Tax Filing Extension

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tax extension sheetYou may have heard by now that the Internal Revenue Service is offering a filing extension to taxpayers who failed to file their 2010 tax returns. This might make you wonder who is eligible and how to go about filing for an extension. Well, wonder no more.

In certain circumstances, asking for an extension is not appropriate. The IRS says taxpayers should not file for an extension if their problem has to do with being unable to pay their tax bill. They suggest filing your return on time and paying as much as you can. You can apply online for a payment agreement by visiting the IRS website at http://www.irs.gov and clicking “Apply for an Online Payment Agreement (OPA).” You can also call the IRS at 800-829-1040.

RELATED: Didn’t File Your Taxes in 2010? You Can Now!

Know that taxpayers who didn’t file their 2010 returns aren’t the only ones who can get a break. If you are unable to file the current year’s tax returns on time, you can get an automatic six-month extension. But that doesn’t mean you can sit back and do nothing until you get around to it. The IRS requires late filers to formally file for an extension.

However, the extension only extends the due date for the paperwork. If you owe money, you’ll have to estimate how much you owe and then make your payment by April 15, 2014. You can find more information in IRS Form 4868: Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.

Click on this video by laws.com for a detailed explanation of how to fill out this form.

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