What is a Tax Extension?
A tax extension is a way for taxpayers to request additional time to file their federal income tax return. It is important to note that an extension of time to file a return is not an extension of time to pay taxes. Taxpayers should estimate their tax liability and pay the estimated amount due by the original due date of the return. Failing to pay taxes by the due date may result in late payment penalties and interest.
Who Qualifies for an Extension?
A tax extension is available to any taxpayer who meets certain criteria. For example, the taxpayer must have a valid reason for needing an extension, such as a medical emergency or a change in financial situation. Additionally, the taxpayer must provide supporting documentation, such as medical bills or proof of financial hardship, to demonstrate their need for an extension. In some cases, the IRS may waive the documentation requirement.
How to Request an Extension
The easiest way to request an extension is to file Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. The form must be completed and submitted to the IRS by the regular due date of the return. If the form is filed electronically, the taxpayer will receive an acknowledgment from the IRS. If the form is filed by mail, the taxpayer should retain a copy for their records.
Paying Taxes Owed
Taxpayers who owe taxes should make an estimated payment by the regular due date of the return. This payment should be made either by check or money order and should be made payable to the “United States Treasury.” The taxpayer should also include their name, address, Social Security number, and the tax year for which the payment is being made. Additionally, the taxpayer should include a copy of Form 4868 with their payment.
Extension of Time to File
Taxpayers who file Form 4868 by the regular due date of the return will be given an automatic extension of time to file their return. This extension is valid for six months and the return must be filed no later than October 15 of the year the return is due. However, taxpayers should be aware that any taxes owed must still be paid by the original due date of the return.
Penalties and Interest
Taxpayers who fail to file their return by the date due, including the extended due date, may be subject to late filing penalties and interest. The penalty for filing a late return is usually 5 percent of the unpaid taxes for each month or part of a month that a return is late. Additionally, interest is charged on any taxes not paid by the due date, including the extended due date, at a rate of 0.5 percent per month.
Requesting an Extension After the Due Date
Taxpayers who miss the deadline to file for an extension may still be able to request a “hardship extension.” This type of extension is granted only in cases of extreme hardship, such as a natural disaster or medical emergency. The taxpayer must provide supporting documentation to demonstrate that they are unable to file their return by the due date, including the extended due date. The hardship extension can extend the filing deadline for up to an additional 90 days.
Filing an Extension for a Joint Return
When filing a joint return, both spouses must sign Form 4868 if both spouses have a filing requirement. If only one spouse has a filing requirement, then only that spouse must sign the form. In the case of a deceased taxpayer, the surviving spouse may file an extension request on behalf of both spouses.
Conclusion
Requesting a tax extension can be a valuable tool for taxpayers who are unable to file their return by the due date. It is important to remember, however, that an extension of time to file is not an extension of time to pay any taxes owed. Taxpayers should make an estimated payment by the due date of the return and file their return by the extended due date in order to avoid any late filing penalties and interest.
