When you find yourself unable to complete your federal tax return by the deadlines, you'll need to file an extension with the IRS in order to avoid any potential penalties for late filing or late payments. By filing an extension, you can extend your deadline to October 15.
Keep in mind that an extension simply pushes back the deadline for filing your taxes. There is no extension of time for you to pay your taxes. When you file for an extension, you will need to estimate how much you owe and pay by the filing deadline.
There's no need to panic if you don't think you'll be ready to file your taxes by the April 15 deadline. The process of filing an extension is a relatively easy one, but there are a few things to know before you do it.
What is a tax extension?
It is possible that some taxpayers associate tax extensions with taxes owed and not with the actual return paperwork.
A tax extension may not be exactly what you think it is. Extensions only give you more time to finish the paperwork, not to pay.
The tax payment is due on the tax deadline, which is typically April 15 or the next business day if it falls on a weekend or holiday.
How do I file a tax extension?
If you need an extension for your taxes, you can file Form 4868 online or by mail with the IRS.
The IRS must receive this form by the tax filing deadline. If you file an extension for your taxes, you have extra time to prepare your return regardless of the reason you need the extension.
IRS Free File
The easiest way to file a tax extension is to use Free File. If you request this service electronically, your filing date will be extended until October 15.
The IRS e-file program allows you to electronically file tax forms directly to the IRS, including Form 4868. The IRS offers an automatic extension to file your tax return if you file Form 4868 electronically by using free or commercial tax software or with the help of a tax professional who uses e-file.
A receipt will be sent to you via email that you can keep for your tax records.
You will still have to estimate your tax liability, even if you have never calculated it. If that estimate means you will owe taxes, you must pay them by the original tax deadline. Although you can avoid the paperwork and exact calculations, you cannot put off payments if you already know you are going to owe money.
IRS Form 4868
The IRS Form 4868 can be used to request an automatic six-month extension. You will also be asked to estimate your tax liability based on the data you have, but you won't have to make a payment right away. Remember, however, that if you end up owing money on your tax bill, you will owe interest.
On Form 4868, taxpayers requesting an extension estimate their tax liability or the amount of taxes due on their income. You will enter your estimated tax liability on Part II of the form, rounding to the nearest dollar, using the tax bracket rate category you expect to fall into.
With an extension filed through a tax professional, you can more easily estimate your tax liability and avoid any unexpected IRS fees.
You shouldn't wait until the last minute if you plan to request an extension. Several years ago, the online service was taken down after people stalled in applying for exemptions, causing a flood of headaches. It's in your best interest not to add to the confusion in an already chaotic year where the IRS is already overburdened and struggling to get refunds out to people.
Do you need to request a state tax extension?
Each state has its own tax extension requirements. There are states that automatically grant six-month extensions to all taxpayers (Alabama, California, and Wisconsin, for instance), but others require you to fill out a form on or before the original due date of your return.
In states that do not impose a state income tax, you would not file a return or apply for an extension.
You can generate the correct state-specific form using your tax preparation software, or you can find it on the website of your state tax authority.
In the same way as your federal tax return, the state extension is only meant to give you more time to file your return, not to pay your taxes. To avoid interest and penalties, calculate what you may owe and submit payment.
The state tax authority's website provides detailed information about extension filing deadlines for your state.
How long is a tax extension?
By requesting a tax extension, you extend your tax return deadline to Oct. 15.
An extension does not extend your payment deadline - it only extends your filing deadline. Those who can't file by the April 15 deadline should estimate their tax bill and pay as much of that at that time.
Regardless of whether you get an extension, you're still liable for interest and a late-payment penalty.
Is there a penalty for filing for a tax extension?
It's not a bad thing to file a tax extension. You won't be penalized for doing so. If, however, you delay payment or don't file, you may be penalized.
In the event that you do not pay the full amount you owe, the IRS will charge interest on the unpaid balance until it is paid in full.
Helpful Resource: What happens if you don't pay your taxes?
A late payment penalty may also apply if you don't pay at least 90% of the amount you owe. Penalties are usually half of 1% of the amount owed for each month, up to a maximum of 25%.
You will also be subject to a late filing penalty if you fail to file your return or Form 4868 by the tax filing deadline. Usually, the penalty is 5% of your monthly debt, up to the maximum of 25%.
When you file the extension, you will have until October 15 to gather your documents and complete your filing. Ensure that you include the amount you've already paid in the payments section of your Form 1040.
Tax Extensions for Overseas Taxpayers and Military Members
Filing a tax extension might not be necessary for everyone. Here are a few common examples of US taxpayers who will receive special extensions to their filing deadline.
US Citizens Living Abroad
When you live and work outside of the country on the tax-filing deadline, you may automatically get two extra months to file your return and pay any taxes due without requesting a tax extension. If you owe taxes at the time of filing, interest will accrue if you do not pay by the original due date.
June 15th: Regular Extension for Americans Abroad
For expats who file US tax returns, an automatic extension of two months from the usual tax filing deadline (April 15) is granted.
October 15th: IRS Extension Deadline
Expats can extend their due date for filing their tax returns to October. Expats who cannot file their taxes by June 15th can submit IRS Form 4868 to extend the deadline to October 15th.
December 15th: Special Extension for Americans Abroad
Americans living abroad can request a final two-month extension to December 15th by writing to the IRS. It should only be used as a last resort since this is a discretionary extension that is not automatically granted.
Helpful Resource: Tax Filing For US Citizens Living Abroad
Members of the military also get extra time based on their location and what they are doing.
You are granted a two-month extension if you are a member of the active military stationed outside of the United States or Puerto Rico, and you are there for the entire 24-hour period before the tax filing deadline.
For active-duty U.S. armed forces personnel serving in a combat zone or hazardous duty area away from their regular duty station while deployed overseas, the IRS automatically extends some tax deadlines and related actions. Those serving in these combat zones can defer filing and paying their taxes until 180 days after the end of their active duty.
Taking your time with Tax Extention
You can be more thorough and relieve stress by taking extra time to gather, review, prepare, and submit your tax return. Requesting an extension is fairly easy, and you do not have to explain the reason for your request to the IRS.
Due to the fact that most requests are automatically granted, the IRS will only contact you if your request is denied.
Before the extension expires, you can file your tax return at any time, and you do not need to attach a copy of Form 4868 to it.
Remember to pay any federal taxes owed by the tax deadline that year, and check with your state about its regulations for state income tax returns.
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