Whether you'll be filing an individual tax return, a business tax return, or a combination of both, this can be a stressful time of year. For some, filing by the April deadline simply won't be in the cards, often due to circumstances beyond their control. Fortunately, you always have the option of filing for an extension, which gives you an additional six months to file your taxes and helps to relieve some of the stress over meeting the April 15th deadline.
Reasons to File an Extension
There are many reasons why you may need to file a tax extension. For example, you may still be waiting on paperwork that you need in order to fill out your tax forms accurately. This could include anything from a W-2 from an employer, a K-1, or a 1099 from somebody you did business with earlier in the year.
If you're a business owner, you may need to file an extension if you're still working on finalizing your financial statements or are otherwise missing some important tax documentation. All of these are valid reasons to file an extension regardless of whether you're filing business or personal taxes.
You may also need to file an extension if you received all your necessary tax forms but have discovered an error on one or more of them. These errors can take some time to correct, so an extension can help you out while you wait for your new and corrected forms to come in.
Some people may also need to file an extension because they'll be out of town or even out of the country during tax season.
How to File For a Tax Extension
Filing for a tax extension is a lot easier than many people realize. All you have to do is submit IRS Form 4868 by the April 15th deadline, which you can do electronically or via snail mail. There is no need to explain your situation or wait for "approval" from the IRS to take the extension. So long as you have filled out and filed the form, you're good to go. If you fail to submit this form for any reason, however, you could end up with a "failure to file" penalty that could add up to 25% to your total tax burden. If filing for an extension is too much of a hassle, Taxfyle offers free extensions when customers commit to filing through Taxfyle.
Understanding Your Responsibilities
Filing an extension is only an extension to file your return, not an extension to pay your taxes. Therefore, you should never file an extension with the assumption that it will give you more time to pay the tax burden you owe.
If you file an extension and fail to pay your tax owed by the April 15th deadline, you could face a number of underpayment penalties and fees that will only add to your total tax burden and make things more difficult on you come the new filing deadline. In some cases, you may even be charged interest on the amount due. To avoid this, an estimated payment should be made to ensure your tax liability is fully covered.
If you're going to have any trouble paying your taxes, contact the IRS to work something out. There are many installment payment options available that allow you to divvy up your tax balance into smaller payments over the course of anywhere from 60 to 120 days. Taxfyle can also help you obtain an installment payment plan.
As you can see, filing for a tax extension is as easy as filling out and submitting a single form either online or via snail mail. Just keep in mind that while there are many legitimate reasons to request an extension on your taxes, you should NEVER use an extension to delay paying what you owe.