The normal practice of filing one’s tax return on the prescribed due date April 15th 2014 is the ideal way for one to be IRS-friendly. In most circumstances though this is possible there are times for one to depend on IRS support forms for extension of time to file their tax returns due to their different genuine reasonable causes. One such support form from IRS is 4868 especially supporting for federal individual income tax returns for fetching an automatic extension of time of 6 months starting from April 15th 2014. Though this form 4868 filing on April 15th 2014 brings in a comfort for an individual in terms of time-buying for filing tax returns at a later date but however has an inherent problem of attracting huge penalty when an individual could not clear most of his tax liabilities to an extent of 90% payable by April 15th 2014 even though form 4868 is filed.
For example if an individual has tax liability as owed to IRS say $7,000 then at least $6,300 should be paid along with IRS form 4868 and when this is not done, a late payment fee of 0.5% will be levied by IRS for each month and this continues up to the maximum of 25%.then which will work out as-
$7,000 x 0.005 = $35 per month and
For up to 25% this is $1,750.
It is better to pay early the unpaid tax dues to avoid and lessen this penalty.
On the other hand if an individual file tax returns by due date and apply for installment agreement with IRS, then IRS will reduce and decide the late payment penalty as 0.25% per month.in this case this works out to –
$7,000 x 0.025 = $17.50 per month
When an individual is not filing form 4868 on due date for automatic extension of time to file individual tax returns and this will add to his misery that irs will charge for the late filing which will be 4.5% of the unpaid tax liability per month for such five months and this will work out as-
$7,000 x 0.045 = $315 per month
Apart from penalties as a result of late-payments, also the tax liabilities to be paid after the due date April 15th 2014 will certainly accrue interest which will be added burden for an individual. IRS calculates at a compound interest rate on a daily basis as long as an individual owes the unpaid tax to irs.so the interest burden will be coming down or over once individual tries to pay off tax dues or clear the entire tax liability is to be understood.
When compared to IRS charging the penalties and interest amounts to an individual for late payments and late filings of individual income tax returns, there are many sources from outside that an individual may seek to get loans at a cheaper interest to file and pay their taxes on time is the advice even IRS is propagating.
Now e-file form 4868 for automatic extension of time as applicable with safe secure and trusted IRS certified service provider http://www.Etax4868.com