Can I file a tax extension so I have more time to raise money for the taxes I owe?
If paying the tax when it’s due would cause you an undue hardship, you can file for a tax payment extension using Form 1127. You must file this extension by May 17, 2021. However, the IRS usually won’t grant an extension for more than six months. Additionally, you’ll have interest on the tax not paid by May 17, 2021 , so you’ll have to pay more in the end. You must pay the tax before the extension runs out or you might be subject to penalties.
If I file a normal tax extension with Form 4868, can I wait to pay taxes until I file?
No. Even if you decide to file a tax extension, you still must make your tax payment by May 17, 2021.
For an extension, file Form 4868 and pay the smaller of your tax liability amounts by the tax deadline to avoid a penalty:
- At least 90% of this year’s tax liability
- 100% of last year’s tax liability
If your adjusted gross income (AGI) was more than $150,000 (or $75,000 if your filing status is married filing a separate return), you must pay 110% of last year’s tax liability
If you’re having trouble paying your taxes by the deadline, some other payment options outside of a tax filing extension include:
- Pay by credit card.
- Borrow from your 401(k).
- Take out a personal loan.
- Enter into an installment agreement with the IRS. Complete the online payment agreement (OPA) or Form 9465.
- Propose an offer in compromise (OIC). This is an agreement between you and the IRS that settles your tax liability for less than the full amount owed.
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