The April 17 federal income tax filing deadline is slightly later than usual this year, but it is now nearly upon us. So, if you have not filed your individual return yet, you may be thinking about an extension. Or you may just be concerned about meeting the deadline in the eyes of the IRS. Whatever you do, do not get tripped up by one of these potential pitfalls.

Filing for an extension

Filing for an extension allows you to delay filing your return until the applicable extension deadline, which for 2017 individual tax returns is October 15, 2018.

While filing for an extension can provide relief from April 17 deadline stress and avoid failure-to-file penalties, there are some possible pitfalls:

• If you expect to owe tax, to avoid potential interest and penalties you still must (with a few exceptions) pay any tax due by April 17.
• If you expect a refund, remember that you are simply extending the amount of time your money is in the government’s pockets rather than your own. (If you are owed a refund and file late, you will not be charged a failure-to-file penalty. However, filing for an extension may still be a good idea).

Meeting the April 17 deadline

The IRS considers a paper return that is due April 17 to be timely filed if it is postmarked by midnight. Sounds straightforward, but here is a potential pitfall: suppose you mail your return with a payment on April 17, but the envelope gets lost. You do not figure this out until a couple of months later when you notice that the check still has not cleared. You then refile and send a new check. Despite your efforts to timely file and pay, you can still be hit with both failure-to-file and failure-to-pay penalties.

To avoid this risk, use certified or registered mail or one of the private delivery services designated by the IRS to comply with the timely filing rule, such as:

• DHL: Express 9:00, Express 10:30, Express 12:00, or Express Envelope
• FedEx: First Overnight, Priority Overnight, Standard Overnight, or 2Day
• UPS: Next Day Air Early A.M., Next Day Air, Next Day Air Saver, 2nd Day Air A.M., or 2nd Day Air

Beware: if you use an unauthorized delivery service, your return is not ‘filed’ until the IRS receives it. See IRS.gov for a complete list of authorized services.

Avoiding interest & penalties

Despite the potential pitfalls, filing for an extension can be tax-smart if you are missing critical documents or you face unexpected life events that prevent you from devoting sufficient time to your return right now. We can help you estimate whether you owe tax and how much you should pay by April 17. Please contact us if you need help or have questions about avoiding interest and penalties.