How to File Taxes: A First Timer’s Guide
Let’s assume that you do need to file a tax return and that you’re planning to do it by the April 15 tax deadline. What you’re really...
Ordinarily, your tax return for the previous year is due by April 15. The date may move slightly due to the presence of a weekend or a holiday, but you can count on mid-April as a definitive landmark for when you should have your taxes completed.
If you aren’t able to submit your tax return by this time, you’ll face one or more penalties, depending on how late you are with the return. You may face both a failure to file and failure to pay charge, if you owe money to the government, and in extreme cases, you may even face the forfeiture of your return, wage garnishment, or even jail time.
As the deadline approaches, you may feel a creeping sense of dread. If you don’t have everything you need to complete your tax return, or if you just don’t have time to get it done, you’ll feel afraid of the consequences of not filing.
Don’t panic. You’ll likely be able to file for a tax extension, provided you’re timely with your submission.
Tax Extension With Form 4868
If you want to get a tax extension, you’ll need to file federal Form 4868, the official “Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.” We’ll review how to fill out and submit this form later in the article, but for now, understand its existence and its role in getting you a tax extension.
The IRS will provide you with an extension of the deadline to file your taxes, regardless of your reasoning. Your house might have burned down, destroying your records and putting your life in total disorder. Or you might just not feel like filing on time. Either way, if you submit Form 4868 properly and in a timely manner, you’ll buy yourself some time for completing your taxes.
The standard tax extension is 6 months. If you’re granted an extension, your new tax filing deadline will be October 15, again unless it falls on a holiday or weekend, in which case it will be the first appropriate day following October 15.
There’s one big caveat, however. You’ll need to file your tax extension by April 15 for this extension to manifest.
Instructions for Form 4868
How can you get a tax extension with Form 4868?
First, you’ll want to estimate the taxes you’re going to owe for the year. Your calculations don’t need to be perfectly precise, but they should help you get close to the amount you’ll owe. Estimate your tax liability by totaling up your gross income and applying exemptions and deductions you plan to claim. Then, subtract whatever taxes were withheld from your paycheck (as well as any estimated taxes you’ve paid). Even with an extension, if you don’t pay your taxes on time, you could be forced to pay a penalty.
Next, download and complete Form 4868. The form will prompt you for several pieces of personal information, including your name, address, and social security number. It will also request an estimation for your total tax liability for the tax year and your total payments thus far. If you’re prepared with this information, it should only take a few minutes to finish.
If you’re making a payment, you’ll also need to include a check to the U.S. Treasury, or credit/debit card information. You may be able to file the form electronically, or you can mail it to an IRS center near your geographic location. Again, make sure you file your tax extension prior to April 15.
Are There Any Penalties for a Tax Extension?
You may wonder whether there are any penalties for applying for a tax extension. After all, you’ll be avoiding the original deadline and filing late. However, as long as you fill out the necessary paperwork by April 15, there’s no inherent penalty to filing for a tax extension.
If you’re going to get a refund—in other words, if the government owes you money upon filing your return—you’re not going to face any penalty. You also won’t face a monetary penalty for failure to file your tax return (as long as you meet the new deadline of October 15). However, you may face penalties if you expect to owe taxes and you fail to pay those estimated taxes on time. You cannot avoid paying your taxes by filing for an extension; you can only delay filing the paperwork.
Should You File for a Tax Extension?
There are clear advantages and disadvantages to filing for a tax extension, so you’ll need to consider them carefully before you move forward.
Let’s look at some of the advantages. For starters, you’ll get 6 extra months to finish your taxes—which is a lot of time. If you’re the type of person who likes to take their time with major responsibilities, or if you’re extremely busy with work and other life responsibilities, this can be a major source of relief. It’s also extremely useful if you have lots of deductions to tally up, or if you’re missing pieces of information you need to file your return.
Depending on your circumstances, a tax extension could also help you reduce your late penalties. If you know you won’t get your tax return done until later in April, you’d ordinarily face a failure to file penalty when you submit your paperwork. But if you file for a simple extension, then submit your tax return later, that penalty will practically disappear.
You’ll also need to consider the fact that you may buy yourself more time to finish your tax return in an appropriate and effective manner. If you’re rushing to meet the deadline, you’ll be more likely to make mistakes—which can be devastating if you don’t catch them in time. With 6 extra months to work with, the accuracy of your tax return will increase. Similarly, in response to the rush season, many tax preparers raise their fees in the weeks leading up to April 15. If you reach out to a tax preparer in the off season, they’ll be more willing to help you for a normal price, or even a discount.
Note that the extension for filling your tax return will also apply to the statute of limitations for receiving your refund. While this doesn’t apply commonly, getting an extension will give you 6 extra months to receive your refund if you file your taxes very late.
That said, there are some disadvantages to postponing your tax return with a tax extension. For example, many people get confused about the nature of a tax extension; if you falsely believe you can avoid or delay paying your taxes, you could end up paying a penalty fee in addition to whatever you owe. You also won’t get any extra time to fund an IRA, and you won’t receive an extension for other monetary contributions.
If you don’t need to file a return, your file for extension could confuse the IRS. They might send you a request for your return, complicating things unnecessarily.
Finally, tax extensions can sometimes serve as a form of procrastination. You’ll be delaying the inevitable, and when October comes around, you’ll be equally unwilling or unenthusiastic to complete your work. Also, April 15 always gets a lot of buzz—but there won’t be a lot of press to remind you your taxes are due come October.
Are you concerned about filing your taxes correctly? Are you getting nervous that the deadline to file is approaching? Get help from the professionals at Taxfyle! Start your tax return today, and stop worrying about it.
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