The U.S. Internal Revenue Service (IRS) recommended taxpayers seeking to extend their tax-filing deadline to do so via the agency’s Free File service while warning that 2023 taxes must be paid off by the due date.
The deadline for filing 2023 taxes this tax season is April 15. Taxpayers can request a six-month delay to file, extending the deadline to Oct. 15. The IRS Free File program provides a “quick, easy way to file an extension,” the agency said in a press on March 21. “All individual filers can use the program software to request an extension … regardless of income. Taxpayers must estimate their tax liability and file by the deadline to receive the extension.”
“Although an extension grants extra time to file, it does not extend the obligation to pay taxes due on April 15, 2024. To avoid penalties and late fees, taxpayers who owe should pay either their full tax bill or at least what they can afford to pay by the April 15 deadline,” the IRS said.
Taxpayers in Maine and Massachusetts have time until April 17 to file and pay their taxes due to holidays.
The IRS pointed out that some taxpayers will automatically get an extension to file their returns even if they do not request the extra time.
For instance, military members serving outside the United States and Puerto Rico will get a two-month extension for filing taxes. The deadline for such taxpayers this year is June 17. Military personnel serving in combat zones will get 180 days extra after they leave the zone to file and pay taxes.
U.S. citizens and resident aliens who live and work outside the country and Puerto Rico also get an extension until June 17.
If an area has been declared a disaster region by the U.S. president, the IRS can postpone tax deadlines for citizens and businesses in the area. A full list of disaster areas that qualify for extension can be found on the IRS webpage.
“By filing either a return on time or requesting an extension by the April 15 filing deadline, taxpayers can avoid the late-filing penalty,” the IRS stated. “Taxpayers reduce the overall amount of tax subject to interest and penalty charges by paying as much as they can by the due date.”
Paying Off Tax Dues
The IRS announced that it will “work with taxpayers who cannot pay the full amount of tax they owe.” Most taxpayers can “set up a payment plan on IRS.gov to pay off their balance over time.”Two types of payment plans are available: a short-term plan in case the taxpayers wish to pay off the dues in 180 days or less, and a long-term one that involves monthly installments.
To qualify for a short-term payment plan, the taxpayer must owe less than $100,000 in taxes, penalties, and interest. For a long-term plan, the taxpayer must owe less than $50,000 and should have filed all the required returns.
A short-term plan comes with zero setup fee. A long-term plan will charge a $31 setup fee in case payments are made via automatic withdrawals, with charges waived for low income taxpayers. The plan can charge $130 in case of non-direct debit payments, with low-income people paying $43, which can be reimbursed under conditions.
“In many cases, loan costs may be lower than the combination of interest and penalties that the IRS must charge under federal law. Taxpayers should act as quickly as possible and are urged not to wait to respond to a notice: Tax bills accumulate more interest and fees the longer they remain unpaid,” the IRS said.
The agency recently highlighted a list of tax return mistakes taxpayers should avoid to prevent processing delays and refund adjustments. It recommended taxpayers to collect all key documents as well as supporting paperwork, like tax deductions or credits, while preparing to file the returns.
The IRS advised citizens to use electronic-filing methods like IRS Free File or the Direct File pilot that is available for certain taxpayers in 12 states. “Electronic filing minimizes mathematical errors and identifies potential tax credits or deductions for which the taxpayer qualifies,” the agency said.
“It’s essential for taxpayers to carefully review their tax returns to ensure accuracy. Opting for electronic filing and selecting direct deposit is the fastest and safest way to receive a refund.”
All taxpayers should ensure that they fill a checkbox regarding digital assets, selecting “Yes” or “No” based on whether they conducted transactions in these assets or not.
“The question must be answered by all taxpayers, not just by those who engaged in a transaction involving digital assets in 2023. Taxpayers must report all income related to digital asset transactions,” the IRS said.
