TAX DEADLINE Extension is fine, but you still must pay
More than 8 million people are expected to seek a filing extension.
WASHINGTON (AP) -- The deadline is midnight and, after looking at the pile of paperwork, instructions and forms, the panic starts. It's impossible to file that 2002 tax return on time.
Taxpayers who procrastinated and now find themselves up against today's filing deadline can get a four-month extension from the Internal Revenue Service by filing a one-page form, no questions asked.
But even those asking for an extension must pay their taxes by today to avoid paying penalties.
"My biggest piece of advice is that the extension is only an extension to file, not an extension to pay," said Evan Snapper, senior manager with personal financial counseling at Ernst & amp; Young.
Estimating what you owe
Taxpayers must make a good faith effort to estimate how much they owe when they use form No. 4868 to file for an extension, and they must pay 90 percent of their taxes owed for the year to avoid penalties.
Taking a wild guess at the tax bill and pleading ignorance later may cause the IRS to revoke the extension.
"It's not going to work, not on April 15," Snapper said.
Late filers can take some comfort in the fact that they are not alone. The Internal Revenue Service expects more than 8.5 million people to file for the automatic four-month extension. The number of people requesting more time has gradually crept up over the past two decades to more than 6 percent.
The extension can be filed the old-fashioned way, with a mad dash to the post office before midnight. It can also be filed over the phone by calling (888) 796-1074, or electronically through computer software or a tax professional.
Tax preparers counsel those who procrastinate because they owe the IRS and cannot pay to file their return or an extension. The penalties for late filing can be much greater than the penalty for late payment of taxes.
"I always tell people, if you don't have the money, make sure you file on time," said Frank Degen, director of the National Association of Enrolled Agents. "The IRS is willing to work with you, but you need to do your part."
Those who can't pay their entire tax bill have at least two options.
By filing another form -- No. 9465 -- taxpayers can set up an installment agreement and pay the taxes over time. The IRS has streamlined this process for those who owe less than $25,000 and can pay the entire amount within 5 years.
Those who want to pay off the IRS right away can use a credit card. The credit card company will charge a convenience fee and the interest rates that apply to purchases.
Tax planners say those who find themselves filing at the last minute every year can make the task easier by keeping their tax documents in one place. Those who use a software program to keep track of their finances can usually prepare their taxes with very little extra work.
Jennifer MacMillan, a tax preparer in Santa Barbara, Calif., said people who can't change their procrastinating ways need to accept their nature and plan accordingly by blocking out the weekend before the April 15 deadline for tax work.
"I'd say those people are always going to be that way," MacMillan said. "They're probably not going to change."