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Apr 15, 2016 by Windham Chamber

Millions Prepare for Tax Deadline; Use Free File or Direct Pay to Get a 6-Month Tax-Filing Extension; Choose Direct Deposit for Refunds

WASHINGTON — The Internal Revenue Service today offered last-minute advice today as more than 10 million taxpayers prepare to file tax returns in the next few days and millions more seek six-month extensions.

Millions of tax returns are expected to be filed each day as the tax deadline approaches, with more than 5 million returns possible on April 18.

According to statistics issued today, the IRS has already received 107 million individual income tax returns through April 8, about 70 percent of the 150.6 million the agency projects that it will receive during 2016.

The IRS reminds taxpayers that quick and easy solutions are available if they can’t file their returns by the April 18 deadline (April 19 for taxpayers in Maine and Massachusetts.). For those who have yet to file and need more time to finish their returns, tax-filing extensions are available. Remember, this is an extension of time to file; not an extension of time to pay.  The IRS projects that it will receive 13.5 million requests for extensions of time to file, the majority of these will be e-filed.

More Time to File

People who aren’t ready to submit their tax return can get an automatic six-month extension to file. The fastest and easiest way to get the extra time is through the Free File link on IRS.gov. In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an automatic tax-filing extension on Form 4868.

Filing this form gives taxpayers until Oct. 17 to file a return. To get the extension, taxpayers must estimate their tax liability on this form and should also pay any amount due.

By properly filing this form, a taxpayer will avoid the late-filing penalty, normally five percent per month based on the unpaid balance that applies to returns filed after the deadline. In addition, any payment made with an extension request will reduce or eliminate interest and late-payment penalties that apply to payments made after April 18. The interest rate is currently four percent per year, compounded daily, and the late-payment penalty is normally 0.5 percent per month.

Besides Free File, taxpayers can choose to request an extension through a paid tax preparer, using tax-preparation software or by filing a paper Form 4868, available on IRS.gov. Of the nearly13 million extension forms received by the IRS last year, almost

8 million were filed electronically.

Those who owe taxes and need a tax-filing extension can get a two-for-one deal. Use IRS Direct Pay or one of the other electronic payment options to pay by April 15 the estimated amount of tax owed, designate the payment as an extension payment, and the IRS will count that as a validly-requested extension – no need to separately file a Form 4868.

Some taxpayers get more time to file without having to ask for it. These include:

  • Taxpayers abroad. U.S. citizens and resident aliens who live and work abroad, as well as members of the military on duty outside the U.S., have until June 15 to file. Tax payments are still due by April 18.
  • Members of the military and others serving in Afghanistan or other combat zone localities. Typically, taxpayers can wait until at least 180 days after they leave the combat zone to file returns and pay any taxes due. For details, see Extensions of Deadlines in Publication 3, Armed Forces’ Tax Guide.
  • People affected by certain recent natural disasters.

Millions Have Received Their Refunds, most through Direct Deposit

As of April 8, almost 82 million refunds have been issued; the average refund amount was $2,798. More than four out of five taxpayers have chosen the best and fastest way to get their tax refund which is to have it electronically deposited for free into their financial account. The IRS program is called direct deposit. You can use it to deposit your refund into one, two or even three accounts. 

Direct Deposit is simple, safe and secure. This is the same electronic transfer system used to deposit nearly 98 percent of all Social Security and Veterans Affairs benefits into millions of accounts.

As of April 8, more than 70 million refunds were directly deposited into taxpayer accounts. The average direct deposit refund was $2,961.

Split Refunds

The federal tax refund is often the largest single check many people receive. It’s an opportune time to start or add to your savings. You can divide your refund into two or three additional financial accounts, including your Individual Retirement Account, or purchase up to $5,000 in U.S. Series I Savings Bonds.

Remember, you should not request a deposit of your refund to an account that isn’t in your name, such as your tax return preparer’s account. Although you may owe your tax return preparer a fee for preparing your return, don’t have any part of your refund deposited into the preparer’s account to pay the fee.

Splitting your refund is easy. You can use your tax software to do it electronically. Or, use IRS’ Form 8888, Allocation of Refund (including Savings Bond Purchases) if you file a paper return. Just follow the instructions on the form. If you want IRS to deposit your refund into just one account, use the direct deposit line on your tax form.

Filed Under: IRS Tips

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Windham Region Chamber of Commerce
1320 Main St., Suite 27
Willimantic CT 06226
Phone: (860) 428-7739

info@windhamchamber.com

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