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Indian Americans: File extended tax returns by October 15
October, 09th 2013

If you are a US taxpayer and requested an extension to file your 2012 taxes, your returns are due on October 15, 2013.

As a US taxpayer living in the US, by filing an extension through Form 4868 way back in April 2013, you got six more months to file your return. According to IRS rules, a US Citizen or US Green Card holder must file US tax returns (if income is above the basic tax exemption limit) irrespective of which country he or she lives in. So as a US citizen or Green Card holder living in India, if you filed for an extension, your return is also due on October 15, 2013. With that date now close, here's what you need to know if you don't file returns by then.

Penalty

There are two kinds of penalties - the failure-to-file penalty and the failure-to-pay penalty. According to IRS rules, even if you file an extension for your tax return, you should have paid your taxes by the original deadline of April 15, 2013.

Failure to pay penalty

If you did not pay your taxes by the original due date of April 15, you will generally have to pay a penalty of 0.5% of your unpaid taxes for each month of delay after the due date. This penalty will not exceed 25% of your unpaid taxes.

However, if you filed Form 4868 for extension by April 15 and you paid at least 90% of your actual tax liability by that date, you will not face a failure-to-pay penalty if the remaining balance is paid by October 15.

Moreover, taxpayers are expected to pay taxes throughout the tax year by way of withholding or estimated taxes every quarter. You must pay estimated taxes if you expect to owe at least $1000 in tax after your withholding and refundable credits. If you did not pay sufficient estimated taxes, you would have to pay a penalty for failure to pay estimated taxes.

"To avoid the penalties on estimated taxes for any tax year, you should pay at least 90% of the tax that you will owe on your estimated income for the tax year or 100% of the total tax paid in the previous year (if income exceeds $150,000 then 110% of the total tax paid the previous year),"says Roy Vargis, an Illinois based CPA and promoter of
Failure to file penalty

If you do not file by the deadline, you might face a failure-to-file penalty. This penalty is usually 5% of the unpaid taxes for each month or part of a month that a return is late. This penalty will not exceed 25% of your unpaid taxes. If you filed for an extension, this penalty will apply from the extended due date, in this case, October 15.

If you file your return more than 60 days after October 15, the minimum penalty is the smaller of $135 or 100% of the unpaid tax. That means, if you did not owe any taxes, you can file your tax returns and will not attract a failure to file penalty.

Did not file for an extension?

If you did not file your tax return in April 2013 and failed to file an extension, you will be liable for both, the failure-to-file penalty as well as the failure-to-pay penalty. Both penalties will be calculated from the original due date, that is April 2013.

 
 
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