Here’s a question some of you might be wondering: “What if I don’t file my taxes on time?”

We are all busy people, and tax laws are very complicated. You might not have found the time to complete your taxes and you realize now that the deadline is in five days (April 17th, 2012). You’re gonna need some options.

Luckily you have a bunch of options. Here they are, in order of best to worst.

And before we get into these items, note that if the IRS owes you a refund then you will not be penalized at all for filing late. Just make sure to file at some point. The government isn’t going to hunt you down when they owe you money; they only do that if you owe them money.

Now for your options if you owe the government:

Work Your Butt Off and File Before April 17th

You still have time to get your return in on time. If you really need help you can try an accountant or a tax service place like HR Block. I’ve never used any of these places so I can’t recommend any, but if I were to pay someone to do my taxes I’d personally go to an accountant instead of a chain provider like HR Block.

You can also software to help you file like Turbo Tax or Tax Slayer. I personally use Tax Slayer because it’s cheaper and does everything I need.

If you can get it in on time, great. If not, move onto the next option:

File an Extension and Submit a Payment

Remember when you were in school and you had that one really nice teacher. If you didn’t finish your homework on time you just had to ask her for an extension and she would grant it without even asking any questions.

Taxes

photo credit: flickr.com/donkeyhotey

The IRS is pretty much the same way. If you ask for an extension (by filing Form 4868), you get a six month extension on paying your taxes.

This will allow you to avoid the 5% per month (max of 25% total) “Failure to File” penalty. This penalty is based off the tax you owe. For example, if you file your tax return late with a total tax bill of $5,000 and you only had $3,000 withheld last year, you will pay a 5% penalty on the $2,000 you still owe the IRS for each month you are late instead of the $5,000 total bill.

However, an extension doesn’t get you completely off the hook. You’ll still have to pay a “failure to pay” penalty, which is 0.5% of what you owe plus interest every month you don’t pay. It’s not a particularly large penalty,but who wants to pay the government any more than you have to?

That’s where the payment comes in. You can submit a payment with your extension for an amount that you think will cover anything you owe. Let’s pretend you’ve already had $3,000 withheld and you think you’ll end up owing another $2,000. You can send in $2,000 along with the extension. Then if you finish your taxes and find you only owe $1,500 more, the IRS will refund you $500 and you won’t pay anything in penalties.

File an Extension Without a Payment

If you don’t have the money to send in a payment then that’s fine. You’re still better off filing the extension so you avoid that hefty 5% per month penalty. Sure you’ll get hit with some interest and failure to pay fees, but those are tiny compared to the failure to file fees.

Once you get the extension, it’s important to finish your taxes as quickly as possible. The longer you wait, the more you’ll pay in penalties. Remember that you can make payments if you don’t have the money to pay your full tax bill right now. If you pay the whole balance within 120 from filing, you aren’t charged a fee for the service. If you don’t get everything paid off in 120 days, you’ll pay a fee of up to $105.

Don’t File Anything

If you don’t feel like doing anything, then don’t file anything. You’ll get hit with big penalties and interest, and eventually the IRS is going to find you and demand their money. If you don’t have the money then they can prosecute you and put you in jail.

This is a really bad idea. If you can’t get your taxes done before the deadline, file an extension and figure out how to pay your taxes.