Understanding Tax Extensions and Payment Plans

What is a common misconception about tax extensions?

• Taxes are due on the extension date.

• Extensions reduce interest rates.

• Taxes are due on April 15th.

• Extensions eliminate penalties.

What is one benefit of setting up an IRS payment plan?

• It cancels all interest.

• It allows spreading payments over time.

• It eliminates all penalties.

• It provides a tax refund.

What happens if you ignore IRS letters about unpaid taxes?

• It can worsen your financial situation.

• You will receive a tax refund.

• The IRS will forget about the debt.

• Interest and penalties will stop accruing.

What might happen to future tax refunds if you have an IRS payment plan?

• They will be doubled.

• They could be used to pay off your balance.

• They will be sent to you as usual.

• They will be canceled.

What should you do if you are in a disaster area regarding taxes?

• Ignore tax obligations.

• Check for eligibility for relief programs.

• Wait for the IRS to contact you.

• Pay taxes immediately.