Tax Day is almost here! But if you find that you are scrambling to get all your paperwork in order, know that all hope is not lost. Thankfully, the IRS allows you to file a tax return after the deadline through a tax extension. If you are successful, you’ll get your deadline extended and, as a bonus, you’ll avoid late-filing penalties.
How to get a tax extension
A tax extension might not be the break you were hoping for, but if you still need one, file Form 4868 online or on paper. You also automatically get an extension if you make a tax payment.
You don’t need to file an extension if you are out of the country when your return is due. In this case, you automatically get an extra two months but can get an additional four months by filing. And if you’re in military service and on duty outside the U.S., you’re considered “out of the country” even if you’re within America’s borders on Tax Day.
Filing a basic tax extension through Form 4868
In most cases, a tax extension refers only to more time for filing. It doesn’t prevent the penalties for paying late, generally half a percent for each month you don’t pay. The smartest thing to do is to file even if you can’t pay right now and pay as quickly as you can.
There aren’t many situations where the IRS will cut you slack, but it does happen. For example, let’s say you pay at least 90 percent of your tax bill by Tax Day and then request an extension. In this case, you won’t owe late penalties as long as you pay the rest of the bill by the extended filing deadline.
Filing an extension to pay
There’s also something called a temporary extension to pay, which isn’t as great as it sounds. It doesn’t get you off the hook for interest and penalties. Instead of filing the usual Form 4868, you set up an online payment agreement with the IRS.
The “temporary extension” is really only to avoid a fee to set up your repayment plan and process payments. If you can pay the bill within four months, you won’t pay the fee. If it takes longer — you can set an agreement for up to six years — there is a one-time fee of $52 for direct debit payments or $120 for other payment methods.
There’s one last way to receive an extension without paying penalties, but it’s the hardest one to get: You have to convince the IRS you qualify for tax penalty abatement because of unusual circumstances.
This is handled on a case-by-case basis, and excuses like “I didn’t know” or “I forgot” aren’t likely to work. Verifiable situations such as natural disasters, hospitalization or serious illness, or death in the family might if you have an otherwise clean tax record.
Estimate your owed federal and state taxes based off your taxable income.
Article last modified on January 31, 2023. Published by Debt.com, LLC