How & When to File an Income Tax Extension
Depending on how complicated your tax situation is, getting all of your documents together during tax filing season each year can be stressful and time consuming.
Even if you aren’t a procrastinator the deadline can sneak up on you quickly, and before you know it you are late. However, did you know that you don’t have to rush to get everything in by tax day?
If you think you’ll need more time you can simply file an extension. Read on to learn what a filing extension is, how to get one, when you might want to, and what you need to know about it before filing one.
What Is a Tax Extension?
Each year, you are required to file a tax return with the IRS. The purpose of a tax return is to document your tax liability to ensure that you have paid the appropriate amount of income tax.
Although you calculate your actual tax liability on your tax return, you must prepay taxes throughout the year.
If you discover after you prepare your return that you have prepaid more than your tax liability over the year from things like estimated tax payments or wage withholding, then you’ll receive a refund for your overpayment.
If you haven’t prepaid at least as much as your tax liability, then you may owe additional tax.
The words tax return and tax refund are often mistakenly used interchangeably.
Your tax return is the form used to document your tax liability. A refund is the amount you receive back from overpayment of taxes.
Income Tax Returns Are Due April 15th
When April 15 falls on a weekend, the deadline is extended until the next business day which is ordinarily the following Monday.
If you aren’t able to gather all of your information, prepare your return, and submit it to the IRS by the deadline then you can file an extension.
A tax extension grants you additional time to prepare and file your tax return. Although it’s often stated as an extension “request” the IRS doesn’t need to approve it. As long as you properly file your extension paperwork, extensions are automatic.
Properly filing your extension gives you until October 15th to file your completed return. However, again that date is moved up to the following Monday when October 15th falls on a weekend.
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What if I Miss the Deadline?
If you fail to complete your return or file an extension by the April 15th deadline then you may be subject to a failure to file penalty.
The penalty is calculated as 5% of your unpaid tax liability for each month (or partial month) that your tax return is late. This penalty is capped at 25% of your unpaid tax balance, but the IRS does charge interest as well.
It’s important that you file your tax return or an extension of time to file by the deadline to avoid penalties.
Taxes Are Still Due
Even if you file an extension, you are still required to pay your tax bill by the payment deadline of April 15th.
An extension of time to file only gives you additional time to complete your tax return. If you don’t pay your taxes by the due date, then you’ll also incur a failure to pay penalty.
This penalty is ½ of 1% of your unpaid balance for each month that it remains unpaid. Like the failure to file penalty, this penalty is also capped at 25%.
To avoid this penalty you’ll need to estimate your tax liability for the year as best as you can and make sure that you’ve submitted payment for at least the amount you think you’ll owe.
How to Get a Tax Extension
To get an extension of time to file you may need to submit the appropriate form to the IRS. The deadline to submit your extension for time to file is the due date of the return before the extension.
You may not need to file an extension request in order to receive an extension. There are some special circumstances that we will address in a later section for which a filing extension is automatic.
If you don’t qualify for a special situation then you need to submit Form 4868 Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.
One way to do this is by making an estimated tax payment through the Electronic Federal Tax Payment System, by debit card, or the IRS Direct Pay. When you make your payment indicate that it is for an extension and your extension request will be processed automatically.
Where to File a Tax Extension
If you don’t make an estimated tax payment using one of the online payment methods then you’ll need to file Form 4868. There are several ways of doing this.
Mail in a Paper Form
You can fill out a paper Form 4868 and mail it in. The IRS site provides a fillable PDF that you can type the information into and then print out. Or, you can print the form and fill in the information by hand.
Pay special attention to the addresses listed on page 4 under “Where To File a Paper Form 4868.” Where you should mail the form depends on where you live, and whether or not you are including a payment.
You can also use certain private delivery services from DHL Express, UPS, and FedEx to satisfy timely filing requirements. Before you decide to use one of these services make sure you reference page 4 of Form 4868 to see that the specific service is listed.
There are several online tax software services that allow you to complete tax documents on your own or with some guided help. Most of the popular tax preparation software providers also provide you with the ability to file Form 4868 using the IRS eFile system. A few of these include:
In addition to on-site services, H&R Block offers its software for use online with several service tiers depending on your individual needs.
TurboTax allows you to file your extension for free.
Although the names are similar, this is not the official IRS e-file system. It is a commercial service that allows you to file an extension for free.
In addition to complete tax preparation software, TaxAct also offers you the ability to file a free tax extension.
You can complete a free online extension, and then come back later to complete your final return.
Professional Tax Preparer
If you use a professional tax preparer such as a CPA or Enrolled Agent then they can also file an extension for you.
There will likely be an additional fee for having them do this for you, but then you don’t have to worry about doing it yourself.
What to Do Before You File Your Return
Once the extension is filed, make sure that you prepare for filing your final return.
Don’t put yourself in a bind by waiting until the extension deadline to start.
You don’t want to be caught off-guard when there is no more time and no more extensions to file.
- After you file for an extension, continue gathering the information and forms you’ll need to complete your tax return.
- Ensure that information is accurate so you don’t have to rush to get corrected information at the last minute.
- Start putting in the information that you do have and keep a checklist of what has been completed.
- If you are still waiting on someone else to provide you with a document or data, politely but regularly follow up with them.
- Finalize your return and give yourself enough time to review it. If you wait too long you won’t have time to address any mistakes or missing information.
What If I Can’t Pay My Taxes
Filing a return and paying your tax bill are not the same thing.
Remember, failure to file and failure to pay penalties are separate. You should still file your return even if you don’t think you can pay your tax bill.
Withholding your return doesn’t alleviate your need to pay. Although filing an extension doesn’t grant you additional time to pay, it can help you avoid the failure-to-file penalty.
While an inability to pay shouldn’t keep you from filing your return, it can still be stressful. If you owe taxes and can’t pay, don’t panic. You have a few options and the IRS even offers payment plans.
Rules for Special Circumstances
You may qualify for an automatic extension if certain special circumstances apply to you.
If you are deployed to a designated combat zone as a member of the armed forces or eligible support personnel then your deadline is extended to at least 180 days from the time you depart the combat zone.
You’re Living Outside the U.S.
If you are living outside the United States and Puerto Rico then you have until June 15th to complete your tax return.
This also applies to members of the armed forces who are stationed outside of the United States that do not otherwise qualify for the combat zone extension.
Pros & Cons of a Tax Extension
Tax Extension FAQs
In some special circumstances, tax extensions are automatic. In most situations, you need to file Form 4868.
Filing an extension itself does not result in a penalty. However, it can prevent penalties. If you know you won’t be able to complete your return by the deadline then you should file an extension to avoid the failure-to-file penalty.
There is no fee to file Form 4868. Some software providers and tax professionals may charge for helping you complete the form or filing it for you.
A tax extension only provides you with additional time to complete and file your tax return. You must still pay any taxes due by the April 15th payment deadline. If you don’t pay your taxes by the deadline you may incur penalties even if you file an extension.
No, you must file an extension request no later than the deadline for your return.
If your state has an income tax, you need to file the appropriate extension form in your state as well.