Tax season can be overwhelming, and sometimes, you may need more time to get everything in order to accurately file your return. The good news? The IRS actually allows taxpayers to request an extension, giving you a little extra breathing room to file your return without facing late-filing penalties. Here’s what you need to know:
A tax extension gives you an extra six months to file your tax return - pushing the deadline from April 15th to October 15th. But here’s the catch, it only extends your time to file, not your time to pay. If you owe taxes, you’ll still need to estimate and pay by the original deadline to avoid interest and penalties.
1. Deduction IncreasesElectronically: You can e-file Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return,” using tax software or through a tax professional.
2. By Mail: You can also file Form 4868 on paper and mail it to the IRS.
3. Through Payment: If you make a payment via IRS Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or using a credit/debit card, you can indicate that the payment is for an extension, and no separate Form 4868 is required.
Skipping both your tax return and an extension request can be costly. The failure-to-file penalty is generally 5% of the unpaid taxes per month, up to a maximum of 25%. If you also owe taxes and fail to pay by the original deadline, the IRS may also charge a failure-to-pay penalty and interest on the outstanding balance. Yikes!
An extension does NOT give you extra time to pay your taxes. You should estimate your tax liability and pay any amount due by the original deadline to avoid penalties and interest.
Filing an extension can help you avoid the failure-to-file penalty, but interest will still accrue on any unpaid taxes.
You may qualify for an automatic extension if you’re serving in a combat zone or living abroad, but specific rules apply.
If you need more time to file, requesting an extension is a smart move to avoid unnecessary penalties. Just don’t forget - paying what you can by the original due date will help minimize additional charges. What more details? Check out theIRS website for the nitty-gritty.
For more information, check out the IRS’s official page on tax extensions here.
*As always, TaxNow recommends consulting with a tax professional
