Presented By: Kenna M. Ulbinsky-Yakal

The April 15th due date for the filing of individual income tax returns is just around the corner. Even with all of the tax services and tax preparation software that is available, you may still feel that the filing date arrives too quickly. If so, you may want to consider extending the filing date for your tax return.

The Basics

A first consideration is whether you are required to file for 2008. That depends on your filing status, age, and gross income. You are required to file a return if you are:

• Single, under 65, and your gross income was at least $8,750.
• Single, 65 or older, and your gross income was at least $10,050.
• Married, filing a joint return, you and your spouse were both under 65, and your gross income was at least $17,500.
• Married, filing a joint return, one spouse is 65 or older, and your gross income was at least $18,550.
• Married, filing a joint return, both you and your spouse were 65 or older, and your gross income was at least $19,400.
• Married, filing a separate return, and your gross income was at least $3,400, regardless of your age. In addition, you must file a tax return if you had net earnings from self–employment of $400 or more. Net earnings from self–employment is your total self–employment income less the expenses paid in operating your trade or business, multiplied by 92.35%.If you are unmarried and are claimed as a dependent on someone else’s return—most students fall within this category—you must file a tax return for 2008 if you have earned income of more than $5,350, unearned income of more than $850, or if your gross income is more than $850 and exceeds your earned income by more than $250.Even if you are not required to file a tax return, you should file a return if you are due a refund.File or ExtendAssuming you are required to file, your return must be filed or extended by April 15. To meet the deadline, your tax return or form for extending filing of your return must be signed and postmarked on or before April 15 of the year following the previous calendar year. Failure to file a return or an extension form on time will result in interest and penalties.In general, if you believe you are entitled to a refund, you will want to file your return on or before the due date. Typically, the earlier you file for your refund, the sooner you will receive a check from the IRS.

  On the other hand, if you estimate that taxes are due, it probably makes sense to delay filing your return or the extension form until near the April 15th due date.

  Whether you anticipate a refund or expect to pay taxes, the major reason for extending the filing date for your return is that you need more time to organize your files and work on your tax return.

  The IRS will automatically grant you a six month extension to complete your return. To get the automatic extension, you must file Form 4868, Application for Extension of Time to File U.S. Individual Income Tax Return, with the IRS by the April 15 deadline, or make an extension-related electronic payment. You can also file your extension request by phone or by computer instead of using the paper Form 4868.

  Now, here’s the catch, the extension gives you extra time to complete your return, but it does not extend the time for paying any taxes due. You will owe interest on any amounts not paid by the April deadline, plus a late payment penalty if you have paid less than 90 percent of your total tax by that date.

  Advantages and Disadvantages

  The advantage of an extension is that it gives you more time to work on your return. The extra time can be especially welcome if you are out of the country, ill, or do not receive w-2s, 1099s, or other necessary forms until on or after the filing date. The extra time is also helpful if you’ve procrastinated and find yourself in a jam.

  One disadvantage to filing for an automatic extension is that it requires you to accurately estimate and pay most or all of your taxes by the April 15 date in order to avoid penalties and interest. Fortunately, if you are using a software tool to help with your taxes, obtaining an accurate estimate is relatively easy, even if you don’t have all of your information organized.

  Another disadvantage to filing for an automatic extension is that, if you are a procrastinator, the extension just gives you another reason to procrastinate.

  Bottom line, it usually makes sense to file your return by the April 15th deadline. By filing and paying on time you avoid the risk of interest and penalties associated with late filing or payment. On the other hand, if you genuinely need more time to prepare your return, it’s good to know that extensions are available. An extension should not, however, be used as an excuse to procrastinate.

  Procrastinate with your spouse, with your boss, or with your friends, but procrastinate with the IRS at your peril.

  Provided courtesy of Prudential. For more information, contact Kenna Ulbinsky-Yakal. Kenna is an Agent with The Prudential Insurance Company of America’s Penn-Delmar agency located in Newark, DE. Kenna can be reached at kenna.ulbinsky-yakal@prudential.com and 302-224-9340.

  IFS-A139971, Ed. 10/2007, Expires 4/29/2009

  This article provides general information for the subject matter covered. Prudential, its affiliates and their sales professionals do not render tax or legal advice. Please consult with your attorney, accountant and/or tax advisor for advice concerning your particular circumstances.

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  Provided courtesy of Prudential.