When the tax deadline approaches, many feel the pressure to get everything in order. Fortunately, the IRS allows you to request a tax extension, so you can prepare your return without rushing.
Already in 2022, the IRS (Internal Revenue Service) approximately 19 million people filed the tax extension form. We’ll show you how to request your extension below.
What is a tax extension?
A tax extension is not permission to delay paying what you owe, but more time to complete the paperwork. This means that, although you have more time to file your return, you must calculate and pay any debt before the regular deadline to avoid interest and penalties.
How a federal filing extension works
An extension typically gives you an extra six months to file your return. However, if you owe money to the IRS, you’ll need to pay an estimate along with your request to avoid late payment penalties. Also, filing a federal extension doesn’t automatically extend deadlines for state returns; in many cases, you’ll need to file for a separate state extension.
What are the extension deadlines?
The extension deadline is April 15, right around the time tax filing is due. If you need more time, the IRS will give you up to 6 months if they grant it to you.
Almost as a general rule, many taxpayers (such as those living overseas, some military personnel, and others affected by natural disasters) usually automatically get this extra time without penalty.
Important deadlines
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- Deadline to file taxes: April 15, 2024.
- Deadline to request an extension: Also April 15, 2024.
- New deadline with extension: October 15, 2024.
How to request the extension? Step by step
If you need more time to prepare your return, follow these steps to make sure you meet the requirements:
1. Do you owe money or are you waiting for a tax refund?
It is essential to calculate your adjusted gross income (AGI) and compare it to the taxes paid during the year. If you are expecting a refund, you do not need to request an extension, but if you owe money, you will need to pay an estimated amount before the deadline.
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The IRS has instructions for calculating AGI (click here). If you find it too complicated due to tax deductions, our advice is to turn to a professional to help you with your return. Remember, if you are due a tax refund, you will not need to file an extension.
2. Submit your extension request.
Complete IRS Form 4868 (available online or in paper format.) You can file it electronically through IRS Free File if your adjusted gross income is $79,000 or less. You can also use tax preparation software.
3. Request a state extension, if applicable.
Depending on the state you live in, you may need to file an additional request to avoid local penalties.
4. Set up a payment plan if necessary.
If you can’t pay your taxes in full, the IRS allows short- and long-term payment plans for amounts under $50,000.
Tax extension FAQs
1. Are there penalties for filing an extension?
No, filing an extension avoids penalties for not filing your return on time. However, if you don’t pay your taxes, you could face fees of up to 25% of the balance owed.
2. Can you file online?
Yes, through Form 4868 on the IRS website or by using tax software.
3. Does extending the filing deadline mean more time to pay?
No. Although you’ll get more time to gather documents and complete your return, payments must be made by the original deadline.
Make sure you meet the deadlines to avoid unnecessary fines!