Now that tax day is here, if you haven’t filed your federal and state income taxes there’s no need to panic. You still have an opportunity to do so without severe penalty. All you have to do is file a six-month extension with the Internal Revenue Service.

Typically this six-month extension will give you until October 15 to file but since that’s a Saturday this year, you have until October 18 if you receive an extension. To receive the extension, you’ll need to fill out and submit a 4868 form which is an application for the extension. They don’t require a reason for the extension but it’s important to remember that this is an extension to completely file your tax returns and not an extension to pay taxes you owe.

But what happens if you don’t file for an extension and miss the filing deadline. There are a few issues that could arise for you if this situation occurs. Once the deadline passes, the IRS will begin bestowing late penalties and interest onto you. So if you’re going to be late, it’s important that you get that 4868 form in acquiring the automatic six-month extension.

Late-Payment Penalties

If you’re late in paying your taxes, you’ll usually be penalized one-half of one percent of any taxes that were not paid by April 18. You’ll then be charged for each month or part of each month that the tax was not paid. The maximum you can legally be penalized is 25 percent of the taxes due.

If you can show that you have a “reasonable cause” for filing your returns late, you’ll not be punished with a late-filing penalty. If this is that case, you should be prepared to provide proof. Any documents of proof should be attached to your tax return and not to your 4868 form.

You can be considered for reasonable cause if for the period covered by the automatic extension you have paid at least 90% of your actual 2015 tax liability prior to the regular due date of return through withholding, estimated tax payments, or payments made from Form 4868.

Late-Filing Penalties

If you receive an extension to file your taxes and still miss the extended due date, you’ll be charged a late-filing penalty. This penalty is usually five percent of the total amount due for each month or part of each month that your return is late. The maximum penalty you’ll be assessed is 25 percent of taxes due.

If you’re more than 60 days late filing your tax returns, you’ll be charged a penalty of $135, a number that is adjusted for inflation, or the balance of the tax that’s due on the return, whichever is smaller. If you can show “reasonable cause” as to why you’re filing late, you may have the penalty expunged. As with late-payment penalties, attach a statement to your return fully explaining why you’re filing late.

Acquiring Interest

If you do not pay your full tax bill by April 18, you will be charged interest on the taxes you owe but have not paid. Even if you are judged to have a good reason for not paying on time, you will still be charged interest on that money owed.

So if you still have to pay your taxes by April 18 then why would anyone file for an extension? The most common reason is to receive more time to get their paperwork in order. Many financial institutions send revised 1099 forms closer to the tax deadline so an extension gives those receiving those forms some extra time to make sure their returns are completed and accurate. If you have a special situation like sale of property, exercise of stock options, or cancellation of debt income, it may be more difficult than usual to gather all necessary documentation and accurately fill out your tax return. The extension will give you the time needed to do so.

With the tax deadline having arrived, most people have filed their returns weeks ago. But if you’re not one of those that got done early, there no need to fear. You can receive an automatic six-month extension simply by submitting a 4868 form. To ensure that your tax return is filed accurately, come to G.I. Tax and let us help you.