Tax Day 2014: How to file for an extension and how much you have to pay to avoid penalties

It's here. Tax day.
 
April 15 is the deadline to file your income taxes.
 
If you don't file, and you owe, you pay a penalty of 5% per month of the unpaid balance.
 
The good news, all of us can file an extension. It's called a form 4868.
 
It's free and it means an automatic six more months to file a complete tax return instead of rushing through it.
 
But that's only for the paperwork. 
 
If you owe taxes, you don't get a delay in paying.  The IRS wants that money now or you get hit with a 1/2 percent per month penalty.
 
To avoid that in many cases, you need to pay at least 90 percent of the total you think you'll owe, or 100 percent of the tax you paid on last year's tax return.
 
If you can't make that payment, you can apply for an installment agreement and pay what you owe over time. 
 
Or you can ask for an additional 120 days to pay. 
 
But both of those will still mean you pay some kind of penalty.
 
Bottom line, if you don't pay what you owe by April 15 penalties and interest will begin.
 
But those penalties can cost a lot less if you don't ignore your taxes, file an extension and work out some payment plan.
 
The IRS has plenty of extension information available to you.
 
E-mail me with any consumer issue you have or "like" the Let Joe Know Facebook page and tell me about it there.
 
 
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