Waiting until the last minute to pay your taxes can cost you if you are expecting a refund, since the government hangs on to your money and receives more interest on it. However, if you owe money to the government, that same principle applies to you. Why not wait until the last minute?
There is no reason not to, as long as your return is postmarked or electronically submitted by May 17th, 2021, and your payments are submitted then as well. Extending your deadline to file does not extend your payment time. You are expected to pay the amount you owe, or your best estimate, by the May 17th deadline.
"Filing for an extension doesn't get you an extension to pay," confirms Betterment Head of Tax Eric Bronnenkant. "Let's say you don't pay by the deadline, well then you're still going to have to pay interest on that money later anyway." He summarizes, "Requesting an extension doesn't solve any problems, if your only problem is that you expect to owe money."
If you do have to make an estimate, it is usually best to err towards overpaying. Paying too much can always be applied to next year's taxes; however, paying too little requires that you pay interest on the difference – and could expose you to an audit if you greatly underestimate the amount.
You have four general payment methods from which to choose:
Electronic methods can be used on all 1040 Series forms, but not all tax forms or taxes can be handled through electronic payments. For details, check the links available on the IRS website. This page also contains links for businesses to use in electronic payments.
Should the computer gremlins attack or you spill coffee on your keyboard, you can still pay by phone using one of the IRS-approved credit/debit card processors, or by calling the IRS directly and using EFTPS.
The good news is you have options, but the bad news is that you still must pay. Choose whichever payment method works best for you and pay at the last minute with confidence. Just do not forget to make that payment before the deadline, or you'll have to make a much bigger payment later.
Failing to pay your taxes or a penalty you owe could negatively impact your credit score. You can check your credit score and read your credit report for free within minutes by joining MoneyTips.
Originally Posted at: https://www.moneytips.com/last-minute-tax-day-filing
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