Question

Ahmed does not have enough cash on hand to pay his taxes. He was excited to hear that he can request an extension to file his tax return. Does this solve his problem? What are the ramifications if he doesn't pay his tax liability by 4/15?

Answer 1

Requesting an extension to file a tax return only extends the filing deadline, not the payment due date. Failing to pay taxes by April 15th can lead to interest and penalties.

Step-by-step explanation:

Ahmed's problem is not solved by merely requesting an extension to file his tax return. The extension gives extra time to file paperwork, but it doesn't extend the deadline to pay any taxes owed. The annual deadline to file taxes in the U.S. is typically April 15th. For those who owe more than they've paid throughout the year, not paying the tax liability by this date may result in accruing interest and penalties until the amount is fully paid. It's vital to plan for tax payments or set up arrangements with the IRS to avoid these additional costs.