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IRS Tax Extension: Filing Federal Form 4868 Tax Return Extension

tax filing extension

April 15th is generally tax day in the United States unless it falls on a holiday or weekend. Many taxpayers may find themselves needing more time to file their tax returns when the filing deadline rolls around.

When it comes to dealing with taxes and the IRS is to avoid waiting until the last possible minute to request an extension.  Filing an extension provides you with an automatic 6-month postponement to file your return until usually October 15th, and it is not an extension for payment.

Steps to Take to File for an Extension on your Tax Return

  • Identify BEFORE April 15th that you need to request an extension to file your taxes.
  • Prepare a rough draft of your tax return to estimate what you owe. If you can’t do this, then make sure at least the IRS has 90% of what you owe to avoid the Failure to Pay Penalty.
  • Visit the official IRS website and complete the Automatic Extension Form (4868) and mail or efile the form. Alternatively, you can pay the IRS some or all of what you owe with a debit or credit card. This provides you with an automatic 6-month extension to file (you don’t have to file form 4868 if you go this route).
  • You will be required when you file to make payment in full of the approximate amount that you owe as determined by your rough draft of the tax return. This amount can be paid either by credit card online or by check in the mail. Either method must be filed by midnight on April 15th to not be considered a late return.
  • After you request your extension, ensure that you file your final tax return within 6 months of requesting the extension.

Implications to Consider when Filing for an Extension

  • Filing for an IRS extension is simply a request to the IRS asking them to grant you more time to file your tax return.
  • Most taxpayers who file for an extension are approved for this if they follow the tax calendar deadlines provided by the IRS.
  • Remember that being granted an extension to file does NOT mean you have been granted an extension for the payment owed to the IRS.
  • Payment on the estimated balance owed must be made at the time your extension is filed.
  • If you do not make a payment with your request for an extension, you may avoid the penalty for late filing but will be responsible for the interest rates associated with your late tax bill.
  • Taxpayers who are requesting an extension should be prepared to pay at least 90% of the amount that they will estimate to be due for the year at the time that the extension request is filed with the IRS. This estimated amount is for the current tax year.
  • If you owe money to the IRS for back taxes, you will be required to pay your tax bill in full by tax day, April 15th. This is true regardless of the extension.
  • Late tax payments are subject to penalties and interest on the outstanding balance.
  • The penalty for failing to file taxes by the deadline is 5% per month up which caps at 25% of the entire balance owed.
  • The penalty for failure to pay your taxes is 0.5% per month in addition to a monthly charge for interest on the balance owed when taxes have been filed.

The Bottom Line

The tax laws and the business of preparing and filing taxes can be overwhelming. Avoiding the process can have serious consequences that can impact you for years to come. Taxes are expensive enough but failing to file and pay on time can add thousands in fees and penalties to your tax bill.

As a taxpayer, you can avoid paying more than you have to by following the rules of the IRS and realizing ahead of time when filing for an extension may be in your best interest. The bottom line is that everyone who owes taxes will be required to pay them. Following the tax calendar and the rules of the IRS will eliminate the penalties and interest associated with outstanding tax balances.