April 15 is the deadline for filing your income tax return, but you do have a chance to delay submitting it. You can choose to file for a tax extension, which gives you until October 15 to calculate your tax liability and submit your return. If you choose to file an extension, there are a few important things you need to know first.
How to Get an Extension
Anyone can file for an extension on his or her tax return. You simply have to file the IRS Tax Form 4868 for that year, which automatically extends your deadline to October 15. This can be done electronically through an e-file or through the mail. However, you do have a time limit on being able to request for a tax return extension. It is also important to fill out the form correctly, as any errors could cause it to be rejected, which then leads to a failure to file penalty and other problems. In some circumstances, you may fall under special rules regarding extensions, namely if you live outside the United States, are traveling outside the U.S., or are serving in the military in a combat zone or a qualified hazardous duty area.
What About Paying the Taxes?
Don’t get too excited about filing for an extension, because you still have to pay your taxes by April 15. The extension is only on actually filing your tax return. If you do not pay what you owe when you submit the form requesting an extension, then you will end up accruing interest and being charged late fees and penalties, increasing the amount of money you owe. Therefore, when you submit the extension, pay all, or as much as you can, of what you expect to owe to the IRS using the Electronic Federal Tax Payment System (EFTPS). You will need to estimate your tax liability before filing your extension.
If you cannot pay your taxes, there are some ways to extend the payment date, including requesting additional time to pay or an extension of time to pay. However, you still may be subject to penalties and interest, although not as much as if you did not file. These will need to be done before the April 15 deadline, not the extended deadline of October 15.
If You Still Have to Pay, Why File an Extension?
An extension gives you more time to find the appropriate paperwork and documentation to fill out your tax return. This can be very beneficial for those who find it difficult to get all the paperwork for a given year, such as if there is a death in the family, illness, natural disaster, or some other situation that has made it difficult to file your return. Many people with complicated finances, such as investors or businesses, also find it beneficial to extend the due date for their tax return, as this provides more time to receive some of the documentation that clients and others may not complete until after April 15, such as Schedule K-1 or Form 1099.
It is best to use an extension only when you need it, since you are still liable for your tax bill come April. If you file an extension just to procrastinate on your taxes or to avoid a large tax bill, you will find your bill increasing quickly due to the additional fees and interest.
Fidelity Tax Relief can help you find solutions to a large federal tax debt and answer any questions you may have. Call 877-372-2520 to speak with our expert tax professionals about your situation.
