If the tax deadline snuck up on you and your tax return is nowhere near ready to be submitted, don’t worry—you do have options. If you file for an automatic extension by April 15, you can give yourself an additional six months to file your paperwork and avoid penalties for late payments.
How do I file a tax extension?
Use Form 4868 to request additional time to file your 2013 tax return beyond April 15. You can file the form electronically or by mail. While a tax extension does give you more time to file, it will not give you additional time to pay what you owe.
This extension is granted automatically, so you will not receive anything in the mail confirming it.
When you file an income tax extension for your personal tax return, you get six more months to file, which means you will have until October 15 for your 2013 taxes. If you are living outside the U.S. and Puerto Rico, you can file for an automatic two-month extension if, on the due date of your return, one of the following is true:
- Your main place of business or post of duty is outside the U.S. or Puerto Rico.
- You are on military or naval service on duty outside the U.S. or Puerto Rico.
The IRS website has additional information about filing for an extension when you are not living in the U.S., as well as more information on filing extensions for corporations, partnerships, and certain trusts.
More time to file, not more time to pay
Before you file an extension, you need to know if you’re going to owe any money. When I file extensions for my clients, I prepare a tax return based on the W-2s and 1099s my clients have given me, and I estimate their expenses based on what I know about them. That way, I can come up with either a reasonable number for the refund or a reasonable expectation of a balance due.
Why do I go through this exercise? Because the IRS can disallow the extension if the agency feels the amount owed is not realistic. For instance, if you file Form 4868 and say you are owed a refund, but you end up owing $10,000, the IRS can say your extension was not valid and charge you penalties on what you owe.
On the other hand, if you “timely requested an extension of time to file and paid at least 90 percent of the taxes you owe with your request, you may not face a failure-to-pay penalty,” according to the IRS website. You must pay the remaining balance by the extended due date.
If you’re short on cash but owe money to the IRS, send in what you can afford when you file an extension. You can reduce the amount you owe in interest and penalties by paying as much as you’re able to afford by April 15.
Eva Rosenberg, EA is the publisher of TaxMama.com ®, where your tax questions are answered. She is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com and tax courses you might enjoy at http://www.cpelink.com/teamtaxmama.