You had all the best intentions of getting your tax returns to Uncle Sam on time. But then life just got in the way. You know you’re not going to make it. So, what do you do?
While the deadline to file for an extension of your business taxes was March 15, you can still file for a personal tax extension. With the April 15 tax deadline looming, here’s how to file for an extension on your personal taxes and avoid penalties.
Pay an Estimated Amount
Even if time is running short, it’s important to try to estimate any taxes you may owe for the year and submit that amount to the IRS when filing for an extension. If you owe taxes and don’t make a payment by April 15 (a day or two later if that date falls on a weekend or holiday), you may be subject to late-payment penalties when you do eventually file your return.
Make sure you subtract any allowable deductions, credits, or exemptions from your income prior to calculating the tax owed. Then check the IRS tax tables to determine how much to pay. Payments can be made by:
- Mailing a check
- Paying online with a credit/debit card (a convenience fee applies)
- Paying online or by telephone through the Electronic Federal Tax Payment System (no fee but you must enroll)
- Arranging a payment from your bank account using Direct Pay (no fee or enrollment)
Note that if you are financially unable to make your tax payment, you may be able to set up a payment plan with the IRS, as long as you appropriately file your tax forms.
File For an Extension
While it won’t relieve your tax burden, filing for an extension can buy you up to six months of extra time to complete your tax return. Most years, your new deadline will be October 15 (later if that day falls on a weekend or holiday).
If you make an estimated tax payment with a credit/debit card or through either the Direct Pay or Electronic Federal Tax Payment System by April 15, you are automatically granted an extension without having to file any other extension request form. If you pay by check, or you don’t believe you owe any tax, you can file for an extension by:
- Downloading Form 4868 – The official name of this form is “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return”
- Completing the Form – Fill in the basic information, including your name, address, Social Security number, estimate of tax due, and how much you are paying
- Filing the Form – Mail the form by April 15 (along with your estimated payment check, if applicable) to the appropriate address for your geographic location, as listed on the form instructions
Note that state and local governments may have varying rules about how to file for extension requests for state and local tax returns. Check with each taxing authority to see how to go about filing for an extension.
When in doubt, a knowledgeable tax accountant can help you determine the best way to handle your tax liability. The peace of mind alone can be worth the cost of doing so.