My best friend is chronically late for everything: dinner, work, parties, you name it. Unfortunately, this behavior can have dire consequences when tax season rolls around. Several years ago she was in a panic because it was April 15th, the tax filing deadline that year, 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 11:58pm.
What she didn’t know is that 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, you don’t have to panic, especially if you’re expecting a refund.
However, if you think you owe the IRS money, the extension doesn’t cover that. The IRS still expects you to pay on time, even if you don’t file your return. If you’re in that situation, file the extension and send in what you think you’ll owe to minimize late payment penalties.
Who Can File for an Extension?
Anyone can apply for an extension, and best of all, the IRS doesn’t ask why. You can inform the IRS if you are living outside of the country, but otherwise, it’s only interested in getting an estimate of the taxes you owe. If you are married filing jointly, you must supply your spouse’s Social Security number as well as your own when you apply for the extension. The IRS only contacts you if your request is denied – otherwise you can assume it was accepted.
Does an Extension Give Me More Time to Pay?
Unfortunately, an IRS tax extension only applies to the tax paperwork, not payments. If you owe money, it is still due on the original due date. You must at least pay an estimated amount of your total tax liability.
How Can I Get an Extension?
You have three basic options: You can file electronically, by mail, or you can simply send the IRS the amount you think you owe them.
Keep in mind that the IRS is very slow to process paperwork, but very quick about processing payments – they’ll quickly notice if you fail to pay them.
1. File Electronically
If your income is below $62,000, you can use a tax software provider through the IRS Free File website – filing an extension is free using this system. If your income is greater than $62,000, you can submit Form 4868 electronically using IRS Free Fillable Forms. You can also use an accountant or reliable tax preparation software program – just keep in mind, there’s no reason to pay a lot of money to file 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 – if it is rejected, you may be liable for penalties. You need to include a check or money order or pay online if you have tax due.
3. Pay Your Tax Bill
You can also simply pay the amount that you think you owe, and send in the actual return later. The IRS accepts credit and debit cards, as well as electronic transfers directly from your bank account. If you send the IRS the appropriate estimated amount of money, it will grant you an automatic extension.
If you’re faced with paying the gift tax this year, you can request an extension by filing Form 709 (the form required for paying the gift tax) and paying that tax, without extending the deadline on the rest of your tax return. However, if you need extra time for that too, Form 8892 extends your time to file Form 709.
If you’re going to be late with other returns, such as estate- or trust-related returns, corporate- or business-related returns, or information returns, review Form 7004 (and talk to your CPA) to see if you can request an automatic five- or six-month extension on filing those forms. As with a regular tax return, you need to send in the amount you estimate you owe at the time you file for an extension.
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 pay on a monthly basis. It’s not worth it to find out what happens 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.
Are you considering filing for an IRS tax extension?