No one likes filing their taxes. It's up there with cleaning the shower grout and getting a root canal. When tax day comes looming, you might find yourself caught short and unable to file on time for a number of reasons. When that happens, you can apply for a tax extension with the IRS and delay your filing due date for a time - but it's not without a cost.
You might be wondering why you might need a tax extension other than procrastination. (Hey, we've all been there.) So many impediments can mean you're not ready by the time tax day comes.
If you don't file for an extension, your taxes are essentially late, and you may face stiff fees and penalties on top of any other charges you may accrue for not paying on time.
Inform the IRS of your late filing, gain an extension, and take care of your taxes by the new due date. The IRS may be strict, but as long as you keep them informed and file the proper forms, they're usually willing to work with you.
If you make a payment via the IRS electronic payment system, technically you don't have to "file" for an extension. You're granted an extension automatically once you pay all or part of your estimated taxes owed.
For other options, though you can file for an extension using Form 4868. Submitting this form is done in one of two ways: either by mail or by e-filing.
E-filing is usually the easiest, and if you're on a tight deadline after realizing at the last minute that you won't make it, you want to e-file to get that extension granted immediately. Extensions must be filed before the final tax day ends to avoid further penalties for missing the tax extension deadline. Here's how to file a tax extension using e-file:
It's as simple as that. You can also follow similar steps to e-file for an extension if you use third-party tax preparation and electronic filing software, which can walk you through the process. If you choose to use paper filing, merely include payment by check in the mail.
While obtaining an extension on your taxes can be helpful, it's not a "get out of jail free" card. If you owe taxes for that year, they're still due by the original filing date.
If you don't pay by that date, you'll suffer not only a financial penalty but also interest. You should be avoiding this by making quarterly estimated tax payments in advance anyway.
Although, if you think you may owe extra by tax day, it's best to cover your bases with a debit card payment. Afterward, you can get the excess paid back when you file your extended return.
Also, while filing a tax extension can be convenient to cover your bases in a single instance, try not to make a habit out of it. Late filings can cause you ongoing financial problems year after year, and those financial problems compound if you miss the second, extended filing date when your interest and fees skyrocket dramatically.
Late filing is a temporary stopgap, but fiscal responsibility is your best long-term plan.