IRS: It's not too late to get a tax extension

Federal and state tax returns are due Tuesday, April 15, but the Internal Revenue Service has a message for taxpayers who just aren't ready to file: Don't worry.

Approximately 219,000 Marylanders are expected to file for a six-month extension on the deadline to file federal income tax returns, according to an IRS press release. A similar extension is available for state taxes.

Michelle Wolfe, a staff accountant with Wolfe and Fiedler P.A. in Sykesville, said that many people are embarrassed to need an extension on tax filing and there is a negative stigma attached.

"They feel that it's a bad thing, but it's not a bad thing if you want to make sure your return is correct," she said, adding, "Sometimes, life happens."

Common reasons for needing an extension include a personal crisis or waiting for third parties to provide documentation, according to Wolfe. She said a delay in receiving a 1099 form or any other necessary documents can cause a taxpayer to need an extension.

Donald Hull, president of Hull Company Accountants Inc. in Westminster, said another common reason for extensions is that people just procrastinate.

"That pretty much happens every year," he said. "You have these certain people who put things off."

Of Hull's 2,500 clients, he said that there is a list of approximately 50 for whom the company plans to file extensions.

"Some people don't like to do taxes or pay taxes," he said.

An extension does not postpone the deadline to pay taxes, however. It only does so to file them, according to the IRS release.

Filing for an extension at either the federal or state level requires taxpayers to estimate their liability and pay that amount, Wolfe said.

The IRS form to request an extension, Form 4868, includes instructions on how to estimate liability using Form 1040.

To avoid getting behind in the future, Hull said, taxpayers should contact their accountant early. He said Hull Company is almost booked solid for next tax season.

"Pre-planning with your accountant is probably the best way to do it," he said. His company sends notices at the end of the year to clients with instructions about what documents they need to bring to their meeting with their accountant.

Wolfe said that she recommends people establish a "tax folder" where they place receipts for things like charitable donations and other important documents.

"Keep an eye on things throughout the year," she said.

Also, for taxpayers who had a higher liability for 2013 than they expected, Wolfe said they should meet with an accountant now to determine what they can do differently to avoid that liability for 2014.

"There are ways to handle that without it being a hardship," she said. Wolfe also recommends checking with an accountant before making withdrawals from retirement accounts such as an IRA or a 401(k) to make sure all tax implications have been considered.

To file for a federal tax extension electronically, visit the Free File page on the website. Taxpayers can also visit their tax preparer, use other tax preparation software or file a paper Form 4868. Payment can be made electronically.

To see if you need to file for a Maryland extension, consult the instructions provided on Form 502E, available on the Comptroller of Maryland's tax website, Payment can also be made electronically.

The deadline to file federal and state taxes or to request an extension without incurring penalties is April 15. The deadline to pay federal and state taxes is April 15 regardless of extensions.