The April 15 tax filing deadline is fast approaching! However, if you don’t think you can finish your 1040 tax return by the due date, there is no reason to panic. You can simply file a tax extension, which will give you a six-month extension (until October 15) to file your tax return. Here are some tips to make filing an extension quick and easy.
1. Complete IRS Form 4868
TTo get a six-month extension to file your income tax return, all you need to do is complete IRS Form 4868 – Application for Automatic Extension of Time To File U.S. Individual Income Tax Return (you can get a copy here). Note that the name on the form says “Automatic Extension.” You don’t even need to provide a reason – just complete the form. However, you must file the Form 4868 by April 15, or you may be subject to a Late Filing Penalty.
2. This is an Extension to File, Not an Extension to Pay Income Tax
While completing and filing Form 4868 will automatically get you a six-month extension to file your tax return, there is no extension for paying taxes you may owe. When completing Form 4868, you will be asked to estimate your tax liability and indicate the tax payments you have already made. If there is a balance due, you should pay the balance by the tax deadline. If you don’t pay the remaining tax due, or if you underestimate your tax liability, you could be subject to a Late Payment Penalty (usually 0.5% of any tax not paid by April 15, assessed each month or part of a month that the remaining tax liability is not paid). If you overestimate your tax due and overpay, the overpayment can be refunded when you file your tax return or applied to the subsequent tax year. If you expect that you are due a tax refund, then no payment needs to be made when you file your extension.
3. There is No Increased Audit Risk When Filing a Tax Extension
Some people fear filing an extension, thinking this will put them at additional risk for a tax audit. This is simply not true. The IRS has many programs and flags to identify tax returns for additional scrutiny (See: 10 IRS Audit Triggers). An extension is not one of those flags. Filing your tax return on extension puts you at no greater risk for an audit than if you filed before the April 15 deadline.
4. Get a Confirmation of Your Tax Extension
It is a good idea to get a confirmation that the IRS received your request for an extension. A simple way to do this is to e-file Form 4868. This can be easily done with many online tax preparation software systems, or through your professional tax preparer. If you choose to file your Form 4868 by paper and snail mail, you should send it certified mail or with delivery confirmation.
5. Don’t Forget Your State Tax Return
If you need to file a tax return for any of the 43 states (and/or the District of Columbia) that has an income tax, you can also get an extension for your state tax return. Many states require that you complete a separate extension form with them. And, like the IRS extension, it is only an extension to file, not an extension to pay your taxes. Check your state tax authority’s website for their process.
6. Special Rules Apply to the Military
If you’re in the military, the IRS offers even more flexibility on filing extensions. For example, if you are in the military outside of the United States, the IRS automatically gives you two months longer to file your return without a tax extension. The IRS will not assess penalties or interest on any tax due during those two months. And, there is even more flexibility for those deployed in a combat zone. (For more information, see this article published by the IRS.)
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Disclaimer: The information and content provided herein is general in nature and is for informational purposes only. It is not intended and should not be construed as a specific recommendation, or legal, tax or investment advice, or a legal opinion. Individuals should contact their own professional tax advisors or other professional to help answer questions about specific situations or needs prior to taking action based on this information. Tax laws and authorities are subject to change, either prospectively or retroactively, and any subsequent change could have a material impact on your situation.