Filing your taxes on time may not be your best skill. So while you’re gathering your documents and preparing your groundwork in putting together all that you require to file your taxes, you may want to apply for a tax extension online. Here’s how you can get to it.
Why You Need a Tax Extension
If you think you need more time to file your tax return, you can get an automatic income tax extension by submitting Form 4868 with the IRS online or by mail. This must be done before the last day for filing taxes to avoid a late-filing penalty from the IRS. The IRS will send you an acknowledgment when you submit the form.
Filing an extension for your tax filing deadline gives you additional months to prepare your return. You get until October 16, 2023, to file your tax return but do remember to file by the October deadline.
Getting an Extension: What it Means
Getting a tax extension only gives you more time to finish the paperwork to file your return, not more time to pay! If you can’t file your return by the April 18 deadline but think you have some tax liabilities to pay off, then you need to estimate your tax liability and pay as much of that as possible with Form 4868 before the deadline. Because anything you owe after the deadline will incur interest and a late-payment penalty even if you get an extension.
You might be able to get a break on the late-payment penalty if you have paid at least 90% of your actual tax liability by the deadline and you pay the rest with your return. However, if you are certain that the tax authorities owe you a refund, then you don’t have to worry about paying when you are filing an extension for taxes. All that happens is that the sooner you file your return, the sooner you will get your refund.
Categories Entitled to Tax Extensions
Some categories of citizens do not need to apply for tax extensions at all. They automatically get more time if they meet the following criteria:
US citizens or residents who lived and worked outside of the country on the tax-filing deadline may automatically get two extra months to file returns and pay any amount due without requesting a tax extension.
Military members, depending on where they are posted and what they are doing. People affected by certain natural disasters may automatically get more time, too (check the list of qualifying disasters and the time extension allowed).
Is There a Penalty for Applying for a Tax Extension?
Filing a tax extension is not wrong and there is no penalty for filing an extension. However, if you do not pay your tax liabilities on time or enough, or fail to file, you may have to pay a penalty. Here’s how much you pay in fines:
If you don’t pay the full amount you owe by the original deadline, the IRS will charge you interest on the unpaid balance until you pay the full amount.
Another late penalty reason: If you don’t pay at least 90% of the amount you owe by the original deadline. This may subject you to a late payment penalty (usually half of 1% of the amount owed for each month, up to a maximum of 25%).
If you don’t file either your return or Form 4868 by the tax filing deadline, you’ll be subject to a late filing penalty (usually 5% of the amount you owe for each month, up to a maximum of 25%).
After you file the extension, you have until October 15 to gather your documents and finish your filing. When you complete your return, include the amount you have already paid, if any, in the payments section of your Form 1040.