For tax year 2010, the deadline is April 18.

If you don’t file your federal income tax, the IRS may file a substitute return in your behalf, which will not include any credits or deductions you may be entitled to.

There is also a failure to file penalty, which is calculated at 5% of the tax for each month the tax is late unless the return is more than 60 days past due, in which case the penalty is $135 or 100% of the tax owed, whichever is less.

Not to mention (which is exactly what we’re doing) that failure to file a return can be interpreted by the IRS as tax evasion.

Filing an extension of time is really easy to do and it doesn’t raise red flags with the IRS or automatically put you on their “to be audited” list.

To get the extension, you need to file Form 4868 no later than April 15 (April 18, 2011 for tax year 2010) and extend your deadline for six months (to October 17, 2011).

The only catch is that an extension of time to file will not give you extra time to pay.

What you have to do is come up with a rough draft of your tax return to get an idea of how much you owe, and pay at least 90% of the due amount or as much as you can afford, to reduce interest and penalties.

You may file electronically or mail your Form 4868 together with a check or payment order for the amount of tax you are paying.

The extension will give you extra time to prepare an accurate return, find more deductions, get a second opinion, or decide whether to carry back or carry forward your losses if a business owner.

If you are still not able to pay your due taxes after the extension of time, you can always opt for an installment agreement (we detailed the topic in our previous newsletter).

Of course, let us not forget you may need to pay state taxes too.

Some states automatically grant an extension to file once you apply for the federal extension, other states have their own forms you need to file to get an extension, but they all expect you to pay due taxes on time.

District of Columbia, for instance, requires you to file Form FR-127 to receive an extension of time and you are expected to include payment with the FR-127 voucher.

In Virginia Form 760E is used as extension and payment voucher as well.

In Maryland you are not required to file a state extension if you filed the federal one, but you should use Form 502E to pay any tentative tax due in order to avoid any late-payment penalty and interest on tax not paid on time.

Even if filing for an extension of time is not at all difficult, you may still need professional advise to file your tax returns and better plan your tax payments for the future.