Whether you’re desperate for a reprieve the night before taxes are due or it’s several weeks out and you’re curious about your options, an IRS tax extension just might be the answer.
But before you set your heart on it, make sure you understand how tax extensions work and when they’re a good idea.
Why file a tax extension
Filing an extension buys you six extra months to complete your tax paperwork. You still need to pay your taxes by the April deadline, but requesting an extension means you won’t have to file your return until October.
The best part is, you don’t have to give a good reason for it; in fact, you don’t have to give a reason at all.
If any of the following situations are true for you, consider an extension:
- You don’t have all of the documents you need to file your return.
- You have all the documents, but they’re wrong and you have yet to receive the corrected copies.
- You’re out of the country (in which case, a two-month extension may be automatically granted.) To get a six-month extension you’ll have to file for it.
- You’re traveling during tax season and won’t be around to get your taxes done.
- You’re home but you procrastinated, leaving too little time to complete your taxes.
- You’re having a personal crisis.
By filing an extension, you’ll avoid the failure-to-file penalty that you’ll otherwise incur by missing the deadline date. Plus, you’ll decrease the likelihood of making a mistake — or missing tax credits and deductions — on a rushed tax return.
How to file a tax extension
To receive a tax extension, file for it between the start of tax season (January 23, 2017) and the April tax deadline (April 18, 2017), using either of the following options.
1. Use Form 4868
The Application for Automatic Extension of Time to File U.S. Individual Income Tax is a simple form that you can e-file or send through the mail.
In Part I of the tax extension form, you’ll be asked for standard identifying information, including your name, address, and social security number.
In Part II, you’ll be asked for income-specific information for the relevant tax year, including:
- Estimate of total tax liability. If you made about the same income this year as last, then last year’s tax return should serve as a good estimate for this year’s tax liability. Otherwise, you’ll have to do a rough estimate based on this year’s numbers. The IRS Withholding Calculator might help.
- Total payments to date. This should include anything withheld from your paychecks, as well as any estimated tax payments made for self-employment income.
- Balance due. This refers to the taxes you owe by the regular filing deadline. A tax extension only extends the filing of your return by six months, not the payment for what you owe.
- Amount you are sending with the extension. Ideally, you want to send the full amount. Otherwise, you’ll be charged a late payment penalty, as well as interest on the unpaid balance. If sending the full amount isn’t an option, send as much as you can.
There are a number of services that file tax extension paperwork online, like TurboTax Easy Tax Extension and H&R Block Online Extension. You can explore more options through the IRS Free File link. When filing online, you will receive automatic confirmation of its receipt.
Filing by mail
Download and print Form 4868. Complete and mail it with your payment to the address indicated in the instructions. To confirm receipt, send it via certified mail with return receipt requested or call the IRS.
2. Make a payment indicating that it is for an extension
With this option, the filing of Form 4868 is unnecessary. Making the payment — and indicating that it is for an extension — is enough to initiate the process. You can do this through:
Speaking from experience, IRS Direct Pay is a very user-friendly option. There’s no credit or debit card processing fee, as the payment is made directly from your checking or savings account.
When using IRS Direct Pay, select 1) Make a payment, 2) Reason for Payment: Extension, 3) Apply Payment To: 4868 (for 1040, 1040A, 1040EZ), and 4) the correct tax period.
Other things to keep in mind
- If there is a problem with your tax extension request, the IRS will let you know and give you time to make corrections.
- You are still required to complete your state taxes on time. If you need an extension on your state taxes, check with your state’s tax authority for instructions.
- You can send in your federal tax return any time before the extended October deadline.
As easy as it is to file a tax extension, resist the temptation to request one just because you can. If you really need it, great. Otherwise, you’re just postponing the same dreaded task you’ll have to tackle in October.
If you have the time and everything you need to do your taxes correctly by the April deadline, get them out of the way so you can focus fully on other financial goals.