Question

Can I file a short-term tax extension so I have more time to raise money for the taxes I owe?

Answer

No. Even if you decide to file a tax extension, you still must make your tax payment April 17.

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 AGI for 2015 was more than $150,000 ($75,000 if your filing status for 2016 is married filing a separate return), you must pay 110% of last year’s tax liability

If you file on time and can’t pay the full balance due, you can file for a short-term extension — up to 120 days — to pay the balance. Call 800-829-1040. You’ll still pay penalties and interest.

Other payment options 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.
  • Complete Form 1127: Application for Extension of Time for Payment of Tax Due to Undue Hardship.

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