Tax Extensions: How They Work, Deadlines And How To File One

A tax extension gives you the opportunity to file your federal tax return at a later date that the official annual deadline (currently April 15) if you need more time to complete the document. As you might imagine, it can come in handy and provide you with up to several months of additional time in which to gather supporting documents, review your records and make necessary calculations.

On the one hand, for those wondering how to file a tax extension, applying for one can prove a helpful tool if you find it to be hard to get everything together by the typical tax filing deadline. On the other, you should know that if you choose to file a tax extension, you’ll still need to pay the IRS any monies that are owed in taxes by the original April 15 due date in order to avoid getting hit with financial penalties.

In any event, it helps to know how to file a tax extension, and how doing so can extend certain time frames for tax filing. Let’s take a closer look at how the process works and how to submit for a tax extension.

What Is A Tax Extension?

Under general operating terms, the Internal Revenue Service (IRS) gives you until April 15 each year to file your federal income tax return. If you choose to file a tax extension, you’ll instead be given a 6-month grace period until October 15 (or the next business day) as a new filing deadline. However, you’ll still need to pay the taxes that you suspect you owe by April 15 to avoid being hit with penalties.

Filing a tax extension could come in handy if you need added time, for example, to get pay stubs, receipts and various tax documents together or to fill out necessary paperwork. It also allows you to avoid getting slapped with costly penalties for making a late filing entirely. But for clarity’s sake, submitting one does not allow you to push out the due date of your tax payment, which is still owed by April 15. It is important to note, as is the fact that unpaid balances submitted after the deadline may be subject to interest and late payment penalties. You’ll therefore want to make as accurate a calculation as possible by April 15 under the circumstances and submit payment accordingly.

Automatic Tax Extensions

Should you meet certain eligibility requirements, you may even receive a tax extension automatically. You won’t need to file for an extension, for instance, if:

• You happen to be a citizen or resident of the U.S. who was living or working outside of America as of the tax filing deadline. In this instance, you may automatically receive 2 months of additional time in which to file a return and make any payments owed without submitting tax extension forms.
• Individuals who found themselves living in certain counties and states affected by various natural disasters may find that they’ve qualified to receive additional time to make a federal tax filing as well.
• Certain members of the military, based on location and activity, are eligible to automatically receive additional time in which to make a tax filing too.

Why File A Tax Extension Request

From a practical standpoint, securing added time to file allows you to avoid severe financial penalties (and penalties on potentially larger balances) for filing your returns late. It also gives you more breathing room in which to get your accounts and affairs in order if you suspect that you’ll owe money to the IRS – and get a better idea of the exact amount you might owe the agency. In effect, filing for a tax extension gives you additional time to get paperwork and documents together, gather any necessary tax forms, and make any detailed calculations that you need to perform. Submitting for one likewise allows you an opportunity in which to do a deeper dive on your finances and plan for any interest and late payments owed.

How To File A Tax Extension Request: 3 Ways

Three relatively simple and cost-effective methods exist for you to submit for a tax extension if needed.

1. Online Without A Payment: If you make under $79,000 in adjusted gross income a year, you can use an online system called IRS Free File to submit your tax extension for free digitally. That said, if your earnings total above this amount, anyone regardless of income can submit for a free extension online via the IRS’ website using Form 4868 as well. Alternately, if you use an accounting firm or tax planning software, both can aid with electronic submission.
2. Online With A Payment: You can also submit partial payment alongside an online tax extension filing via the IRS’ website as well, using various online payment options alongside your extension notification. If you use a qualified tax preparer, such as an accounting firm, or tax software, you can also turn to these resources, respectively, for insight and instruction.
3. By Mail: To submit to receive a tax extension by hand, you’ll need to fill out Form 4868 and send the paperwork to the IRS by postal mail. Documents need to be postmarked by April 15. You’ll also want to get confirmation and proof that you mailed these items in case the IRS has follow-up questions as well.

FAQs About Tax Extensions

Many frequently asked questions (FAQs) exist surrounding the topic of filing a tax extension. Answers to several of the most common are discussed here.

When is the tax extension deadline?

Taxes must be paid by April 15 to avoid incurring interest and penalties. But if you apply for a tax extension, you’ll be granted until October 15 (or the next business day) to file your federal taxes.

When are taxes due with an extension?

As above, filing for an extension does not preclude the need for payment by the original April 15 deadline. Sums paid after this date may be subject to penalties and interest.

Can I file a state tax extension?

Not always. As a taxpayer, you’ll want to check with your state’s tax department to learn about its individual policies concerning tax extensions.

Does it cost money to file a tax extension?

Technically, no – you can submit a filing free by submitting Form 4868 to the IRS prior to the formal deadline for tax filing. But you may incur charges if you seek out the assistance of an outside professional tax preparer. Also, any monies needing to be paid after the April 15 tax filing deadline can be hit with interest payments and penalties as well. You’ll also potentially be subject to significant penalties if you fail to file your tax return by the deadline granted under any extension.

Are there pros and cons of filing a tax extension?

Yes to both. For instance, upsides can include giving you more time to gather documents and paperwork and to get your financial affairs in order. Similarly, pushing off your tax filing deadline may lead to procrastination and unnecessary expenses due to overdue balances unpaid by April 15.

What happens if I file my taxes late without an extension?

If you were to file your taxes late without having submitted for an extension, you may face a failure to file or delinquency penalty. In other words, multiple penalties may apply here – one for failing to file and one on past-due sums owed.

The Bottom Line

Filing a tax extension can help you extend the overall time period in which you have to submit your tax returns to the IRS. This can prove helpful, as it offers filers around 6 months’ worth of extra time in which to get necessary documentation such as pay stubs and 1099 forms together and perform any needed financial computations. At the same time, even if you’ve chosen to file a tax extension, you’ll still need to pay the IRS any taxes that you owe in keeping with April 15 due dates to avoid incurring financial penalties.

Interested in getting a better handle on your finances, and more easily keeping track of where money is going as well? Make a point to download the Rocket Money℠ app today!