How to File a Tax Extension

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This year's deadline to file a federal income tax return is April 15, or April 17 for residents of Maine and Massachusetts. But life happens. If you know there's no way you can do your taxes by then, you can ask the IRS for a six-month extension.

You might have guessed there's a catch: You'll have more time to submit your completed return, but you still need to pay any tax you owe by the deadline. Here's how to buy yourself extra time, and avoid dreaded late payment penalties too.

Steps to Filing a Tax Extension

1. Find out whether you need one.

You may be able to avoid filing an extension altogether. You don't have to request one if you live and work outside the U.S. or Puerto Rico, or if you're on military duty outside those areas. You'll automatically have two extra months to file a federal return and to pay any tax due. That's true even if you happen to be visiting the U.S. on Tax Day.

If you're out of the country and need even more time—or if you live and work inside the U.S. or Puerto Rico and can't file your taxes by the deadline—you'll need to file an extension. But you'll pay for the privilege: Interest will accrue on any tax you don't pay by the due date.

Also, your federal tax return shouldn't be your only consideration. Check on your state's tax extension filing policy as well; the IRS lists state revenue department websites for reference.

2. Figure out how much tax you owe.

Requesting an extension is easy. Understanding what you owe so you can pay on time, well, not so much.

Whether your regular filing deadline is in April or later, to get an extension, you'll have to estimate:

  • Your tax liability, which is your total income tax after deducting any tax credits you qualify for, like the Earned Income Tax Credit
  • The amount of tax you owe after taking into account payroll withholding and payments you've already made

You don't have to do this alone. Some online tax software will help you estimate the amount you owe. An online tax calculator can help too. If you're brave, you can calculate your income tax on your own, but be sure to take into account all the deductions and credits you're eligible for.

Once you estimate how much you owe, you'll need to pay that amount on time, even if you're filing an extension to give yourself time to complete your taxes.

3. Consider making a payment electronically.

When you pay the IRS electronically, you'll have the option to note that it's for an extension on your return. This will save you a step: You won't have to apply separately using Form 4868.

You can make a payment to the IRS in lots of ways, including by auto debit from your bank account or via a debit or credit card. If you use a card, though, you'll have to pay processing fees.

Skipping out on paying your taxes on time comes with pricey consequences. You'll owe interest on any tax you don't pay by the deadline, plus a late payment penalty equivalent to up to 1 percent of the unpaid amount, charged monthly.

There is a workaround, though. You can avoid the penalty by paying 90 percent or more of the tax you owe by the deadline, which includes taxes withheld from your paycheck, and paying the rest when you file your completed return. Make sure to include a statement with your return explaining why you couldn't send the IRS the full amount on time.

Requesting an extension is crucial because you'll pay a penalty for filing your return late — either after the April deadline without an extension, or after the October 15 deadline with one. You can similarly avoid this penalty if you provide a "reasonable explanation" for filing late, according to the IRS.

4. Request an extension online or by mail.

Another way to get an extension is to submit Form 4868 online using tax software, which the IRS lists on its Free File page. Those with incomes below $66,000 a year can access online tax help for free; with income above that, you can still get line-by-line instructions to fill out Form 4868 and submit it online.

Or you can take the old school route and mail in a paper form. Keep confirmation that you sent it for your records; you want to be covered if it gets lost in the mail.

What if My Income Tax Extension Is Rejected?

Your extension may be rejected if it includes incorrect personal information or typos, such as a misspelled name, wrong Social Security number or outdated address.

Don't lose hope: You'll be able to fix these errors and resubmit. A request for an extension can't be outright denied. The IRS will grant it automatically when you apply, as long as you've filled out the form correctly.

Bottom Line

A tax extension won't get you off the hook from paying what you owe, but it will give you breathing room to submit a full return. If you know you won't be able to organize your tax documents or get your return done by mid-April, apply for an extension as soon as you can. While it's an extra step, those six months—and the peace of mind they'll give you—will likely be worth it.

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