Today TaxMama hears from Martin – and several other MarketWatch readers, who say. “In your April 14th article in the Tax Watch section of “Marketwatch.com” you advised that if you are short of cash to pay your taxes you should file for an extension and pay when you file. I believe that’s incorrect: When you file for an extension you’re supposed to pay the estimated amount owing.”
I want to thank for your notes. Especially those who pointed out that I had previously written that the extension is an extension of time to file – not to pay. That means you’re reading my column!
And you’re absolutely correct.
IRS does want you to pay your taxes with the extension.
Have you ever wondered what happens to you if you don’t pay those taxes with the extension? Have you wondered what fiendish tortures IRS dreams up to inflict upon you to ensure that you never stray again?
Actually, all that happens is you pay underpayment penalties and interest on the unpaid balance. Over six months, until October 15th, it amounts to a total of about 7% – not the end of the world, if you just need a few more days or weeks to come up with the money. Much cheaper than most credit cards.
Cool, isn’t it?
So, just because IRS wants something….doesn’t mean we should give it to them. Does it?
And remember, you’ll find answers to lots of questions about tax tricks, and other tax information, free. Where? At TaxMama.com
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