Regardless of the Reason, on April 18, if You’re Not Ready, You May Need to File for a Tax Extension.
A tax extension is sometimes a necessary reality of our busy lives. In a perfect world, all of your supporting tax documents would compiled, neatly filed and labeled, ready to be delivered to your tax preparer on January 31. Many of us, however, have lives that get in the way. Maybe you need more time to track down missing documents or recently experienced an event that has thrown life a little off balance. Regardless of the reason, April 18 is quickly approaching. If you’re not ready, a tax extension may be necessary.
Filing an extension with the IRS will avoid the assessment of any late-filing or late payment penalties and will allow you to push your deadline back six months to October 17, 2016.
Here are five things to know about when, why and how to file a tax extension1:
- File on time, even if you can’t pay. If you complete your tax return but are unable to pay the amount you owe, you don’t need to file for a tax extension. Simply file your return on time and pay as much as you can. This will help avoid the late filing penalty, which is higher than the penalty for not paying the total amount of taxes you owe on time. You may also choose an installment payment plan arranged through the IRS.
- Filing a tax extension does not include extra time to pay. Filing an extension will allow you six additional months to file your taxes. It’s important to understand, however, that this extension does not offer extra time to pay the taxes you owe. If you believe you will owe money for the 2015 tax year, you must estimate the amount and make a payment by the April deadline. If you expect a refund, it will not be processed until you complete your tax return.
- Use IRS Free File to request an extension. IRS Free File is only available through IRS.gov. You must e-file the request by midnight on April 18. If you e-file your tax extension request, the IRS will acknowledge receipt, which you should keep for your records.
- Use Form 4868. You may also request a tax extension by mailing Form 4868, the Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You must submit this form to the IRS by April 18. If you make a payment using an IRS electronic payment option, you do not need to submit a paper Form 4868. The IRS will automatically process your tax extension when you pay electronically.
- Electronic funds withdrawal. If you e-file an extension request, you can also pay any balance due by authorizing an electronic funds withdrawal from your checking or savings account. To do this you will need your account number and bank routing number.
While filing for a tax extension is not ideal, it will give you time to catch your breath and take the necessary steps to accurately file your taxes. Simply follow these recommendations and be sure to meet the new October 17 filing deadline.
Disclaimer: Neither First Financial Security, Inc., its independent contractors, nor any of its affiliated organizations offers tax advice or preparation services. Please consult your tax services professional for tax advice and recommendations.