What is a tax extension?

Filing by the tax deadline may be difficult for some Americans, especially if they travel frequently or have a large amount of paperwork to gather for their returns. Consumers who think they may miss the deadline should consider requesting an extension to avoid hefty penalties.

An extension gives individuals more time to file their taxes without incurring a failure-to-file penalty, according to USA Today. However, consumers who are granted an extension will still be required to pay the taxes they owe by the filing deadline. Individuals who do not pay their tax bill by the deadline will incur penalties and interest charges, significantly inflating their overall balance.

However, adults also have the option to file a short-term payment extension as well, which gives them an additional 120 days to pay their balance. Individuals should keep in mind that receiving this type of extension will not absolve them from paying failure-to-pay penalties or accrued interest, but it will prevent Uncle Sam from initiating collection procedures, such as tax liens or wage garnishment, the news source reports.

Consumers should educate themselves on the different filing deadlines and payment options available to them, which may encourage them to meet with a tax professional early on during filing season.

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Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs. 
Posted To: Tax Ranger's Blog By: Tax Ranger On: Tuesday, April 19, 2011
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