My sister is chronically late for everything. Dinner, work, parties – she just can’t seem to do anything on time. I remember one year, she was in a dead panic because it was April 14 right before the tax filing deadline and she had yet to file her taxes. She rushed through the paperwork and drove to the post office to drop them off in the mail slot at 11:58 p.m. that night.
She didn’t know what should come as good news to people who also have her affliction – the IRS allows you to apply for a six month extension on filing your tax return. So, if you don’t have it all together by tax day in April, don’t panic! You can extend all the way to October.
Want to know more? Here are the answers to frequently asked questions related to filing a tax extension.
Filing a Tax Extension
Who can file for an extension?
Anyone can apply for an extension, and best of all, the IRS doesn’t ask why. There’s a checkbox for if you are living outside of the country, but otherwise they’re only interested in getting an estimate of the taxes you owe. If you are married filing jointly, you’ll need to put in your spouse’s social security number as well. The IRS will only contact you if your request is denied – otherwise you can assume it was accepted.
Will filing an extension get me a reprieve on paying my taxes?
No. This is an extension on filing, not paying, your tax payments. If you owe money, it is still due on the original due date. You must at least make an estimate of your total tax liability, and if you didn’t have enough withheld from your paycheck, you’ll need to send in a check or money order, or pay electronically. If you ultimately end up owing more money than that, the IRS will assess you a penalty on the unpaid amount.
However, the good news is that if you think you’ll ultimately end up owing more in taxes than you estimated, you’ll save money on those penalties if you asked for an extension. You’ll still be assessed a penalty of 0.5% of the tax still owed, but if you don’t file for an extension, you’ll be hit with a 5% penalty!
How can I get an extension?
You have three basic options: you can either file electronically or by mail, which is a formal request for an extension, or you can send the IRS the amount you think you’ll owe them. (The IRS is very slow about paperwork but very quick about processing payments – they’ll notice very soon if you fail to pay them, but not if you fail to file.)
1. File Electronically
You can file an extension through most tax programs like TurboTax, or, if your income is $58,000 or under, you can use the IRS Free File website. Filing an extension is free using the Internal Revenue Service’s Free File system. If you aren’t able to use their system, only use a trusted tax preparation software program – there are many “services” on the web that will charge you a lot of money for filing this simple form.
2. File by Mail
You can also mail in the request form (Form 4868: Application for Automatic Extension of Time To File U.S. Individual Income Tax Return). Make sure you completely fill out the form because if it is rejected, you’ll owe significant penalties on your now-late payments. You’ll need to include a check or money order, or pay online, if you have any tax due.
Here’s a step-by-step guide to filling out Form 4868 (if you file electronically through a tax preparation company or the IRS, you’ll need to provide this information as well):
- Fill in lines 1 through 3 which is your name, address, and social security number.
- Estimate your total tax liability for the previous tax year. You can do this using the estimator tool on the H&R Block website, or, if you have most of the documents you need, you can use a program like TaxACT to do a preliminary run-through.
- Fill in the estimated tax liability on line 4.
- Fill in lines 5 through 9, indicating how much tax you’ve already paid through withholdings, what you ultimately owe the government, and check the box if you are out of the country.
- Attach a check or money order with the form for the amount indicated on Line 7. You can also pay by credit, debit card, or bank withdrawal online.
- Make a copy of the form for your records.
- Mail the form postmarked by the tax deadline (there are specific addresses to send it to, depending on your state – check the form’s instructions) and send by certified mail or another method that will confirm delivery so that you can track it.
3. Pay Your Tax Bill
You can also simply pay the amount that you think you’ll owe, and send in the actual return later. The IRS accepts credit and debit cards, as well as allowing electronic transfers directly from your bank account. If you send the IRS the appropriate estimated amount of money, they will grant you an automatic extension on receiving the actual tax return.
Special Situations
If you’re faced with paying the gift tax this year, you can request an extension by filing Form 709 and paying that tax, without extending the deadline on the rest of your tax return. Form 8892 will extend your time to file Form 709.
If you’re going to be late with your information returns, estate or trust statements, or other corporate or business-related returns, check Form 7004 to see if you can request an automatic 5 or 6 month extension on filing those forms. As with a regular tax return, you’ll need to send in the amount you estimate you’ll owe at the time you file for an extension.
Final Word
Remember, you won’t get a break on having to pay your tax bill by filing an extension. If you simply don’t have the money, you should contact the IRS about setting up an IRS tax payment plan. In most cases, you will be automatically approved and be able to send them monthly payments. It’s not worth it to find out what will happen if you don’t pay your taxes. You should only file an extension if you need the time to get your return together, or are waiting for some of your documents to be finalized.
So if you’re stressing about missing a document or just not having the time to get a complicated return together, take a breath and file for an extension. With an additional six months of time ahead of you, you’ll be able to double check for all of your tax deductions and credits – not to mention being able to get an accountant’s help if you need it once they’ve finished everyone else’s taxes!
(photo credit: Shutterstock)
