5 Things to Know About Filing a Federal Tax Extension

Filing a federal tax extension can be very useful for people who simply can't get everything prepped and ready by the April 15th tax deadline every year.

When your taxes are more complicated, or you're waiting on certain tax forms, or you just haven't gotten around to filing by the due date, it's easy to get worried about filing your taxes on time.

That is what federal tax extensions were created for.

Before you decide whether or not to file a federal tax extension, here are 5 important things to know:

1. Why Should I File a Tax Extension?

Filing a tax extension gives you an additional 6 months to file your tax return.

Whether you have a complicated tax situation, or you simply ran out of time to file your taxes, a tax extension can be a huge help.

You can complete the filing process using Form 4868, which you can submit by mail or online through an authorized IRS e-filing provider for faster processing times.

2. Is There a Penalty for Filing a Tax Extension?

There are no penalties for filing a tax extension. To the contrary, filing a tax extension allows you to avoid incurring failure-to-file penalties.

When you don't file your taxes on time, or fail to file a tax extension to get additional time, you could pay penalties that really add up.

The failure-to-file penalty is calculated at 5% of any taxes owed, and maxes out at 25% of unpaid taxes.

The minimum failure-to-file penalty for any taxes due that are more than 60 days late is $485, or 100% of the tax required to be shown on the return, whichever is less.

The IRS sends out a letter once they realize you failed to file.

3. Can Anyone File a Federal Tax Extension?

Just about anyone who is required to file a federal tax return is allowed to file a federal tax extension. Businesses, corporations, resident aliens, estates, and other entities all have federal extension forms they can file.

In MOST cases, Form 4868 is what is used to file a tax extension. As long as your information is correct, and the extension is filed on time, the application should be accepted. (You can e-file this form as opposed to mailing it in for faster processing.)

If you are not an individual tax filer, be sure to check the required forms, or work with a professional to ensure you file the proper form for your entity.

4. When Should I File a Tax Extension?

In order to be eligible for a tax extension, it is your responsibility to make sure it is filed on time. The typical tax filing deadline is April 15th each year. In 2024, tax extensions are due by April 15th for traditional filers.

If you know you will need an extension, you'll want to file it early so you don't miss the deadline.

5. When Do I Have to Pay My Taxes?

Many people think that filing a tax extension also gives them an extension on their tax payments. This is a common misconception.

The federal tax extension grants you extra time to finish filing your taxes, however, any taxes due still need to be paid by the original filing deadline.

The failure-to-pay penalty is .5% for each month, or part of a month, up to a maximum of 25%, of the amount of tax that remains unpaid from the due date of the return until the tax is paid in full.

While you may not know your exact taxes due, you'll want to make an estimated payment based on the information you have.

Prepare for the Upcoming Tax Season

If you're not ready to file your taxes by April 15th, consider filing a federal tax extension. Remember to file your extension request prior to the deadline, and to pay any estimated taxes at that time, too.

If you need help extending the time to file your tax return, IRSExtension.online has you covered!