4 Tips to File a Tax Extension
Your Takeaways:
- Filing a tax extension gives you an additional 6 months to complete and file your tax return, pushing the deadline from April 15th to October 15th.
- There are no penalties for filing a tax extension, as long as you submit it by the original April 15th deadline.
- You still need to estimate your tax liability and pay any taxes owed by the original April 15th deadline when filing an extension. Otherwise, you may face penalties and interest on unpaid taxes.
- You can file a tax extension either electronically or by submitting a paper Form 4868. An e-file service can make the process simple and provide confirmation when your extension is accepted.
It’s tax season, and there is so much to do! Not only do you have to gather up all your documents, but then you have to organize things and schedule time with tax professionals to get it all taken care of.
What if we told you that you can make things simpler if you file a tax extension?
Filing a tax extension gives you an extra 6 months to file your taxes.
Check out these four tips to file a tax extension!
1. Filing an Extension Gives You an Extra 6 Months to File Your Taxes.
When you file a tax extension, you get an extra 6 months to file your return. If your tax return is typically due on April 15th, then this means your tax return will now be due on October 15th.
If that date falls on a holiday or a weekend, your due date is generally pushed to the following business day. For example, in 2023, the tax deadline is April 18th due to a weekend and a holiday. The tax filing deadline with an extension is October 16th, 2023 due to a weekend.
Imagine how much more organized and prepared you could be with an additional 6 months to file your taxes? This gives you an added window to get everything compiled, gather any necessary forms, and organize the details for the filing process.
2. There is No Penalty for Filing a Tax Extension.
When you fail to file a return on time, or perhaps fail to pay taxes due, you end up paying a penalty. The IRS charges some hefty penalties for these things. The categorization of this breakdown is a little bit complicated, but here’s the gist of it.
Your penalty will be 5% of the unpaid taxes for each month or part of a month that a tax return is late, up to a maximum of 25%. And if you don’t pay your taxes due, then it’s .5% for each month, or part of a month, that the tax remains unpaid, up to a maximum penalty of 25%.
But when you file an extension you won’t have a penalty for not filing. The extension form gives you an extended deadline penalty-free.
3. You Will Need to Pay Your Taxes When Due.
Another common misunderstanding is that when you file a tax extension, you don’t have to pay your taxes due. However, the caveat to filing an extension is that you should still pay any estimated taxes due by the filing due date.
If you owe taxes, you should not wait until the extension filing deadline to pay. If you do, then any unpaid taxes will be fined.
How do you know what to pay? You can use tax calculators or work with a professional to determine the estimated amount of taxes you owe.
According to IRS guidelines, if you pay at least 90% of the amount due before the due date, then you can avoid the penalty. This provision is there because the IRS knows you are working with estimated numbers.
4. How to File a Tax Extension
There are two primary ways to file a tax extension. You can file your extension online, or submit a paper Form 4868.
Even if you file electronically, a Form 4868 will be required for the extension. This form is an application for an extension for filing a US individual tax return. The form provides detailed instructions for e-filing or sending in a paper form.
While this form is 4 pages long, the majority of it is informational. The only part that needs to be filled out is the first page.
This section includes your personal identifying information on one side and a column to fill in your estimated tax liability on the other. Complete the form with all necessary details and then submit it through your chosen method (either by mail or online).
You can also mail a check for estimated taxes due or make an electronic payment for them, and indicate the payment is for an extension.
Don’t Fret About Taxes, File a Tax Extension
Tax season can be stressful! But it doesn’t have to be. Rather than trying to rush to get everything together before the tax deadline, you can give yourself a bit of extra time and file a tax extension. An additional six months could give you the time needed to finish compiling documents and forms and make the process far less stressful.
Don’t forget that you do need to pay estimated taxes to avoid paying a penalty for any unpaid taxes. However, you will be able to avoid a non-filing penalty if you file your tax extension on or before the tax deadline.
Need help filing an extension? Click here to file a tax extension now.
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