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- Filers can get an extension of tax for up to six months.
- Although an extension gives you additional time to file your taxes, it doesn’t extend the due date for paying any owing tax liabilities.
- You can file for a tax extension at no cost, but you could be subject to penalties if you fail pay the IRS some or all of your tax owed.
- See Personal Finance Insider’s picks for the best tax software »
Anybody can file a tax extension. You may need additional time to file your taxes, regardless of whether you are away from home, in an emergency, or just plain not having all the paperwork in order. Your reasoning is irrelevant. An extension allows you to file income taxes for six more months. Before you ask for an extension, be sure to understand the rules.
What is a tax extension?
Tax extensions give you an extension until Oct. 16 to file your tax return. You can get a tax extension that extends the time you have to file your return, but it doesn’t grant you an extension if money is owed to IRS.
“Most people believe that if they owe IRS, it will waive a few months of payment,” Nakiea S. cook, an accountant and owner of NC Accounting & Consulting Solutions. You can actually calculate the amount you owe, and then send payment along with your tax extension form.
If you owe money, you’ll need to make a payment by the filing deadline — which is April 18 for the 2023 filing season — in order to avoid penalties and interest. If you are unable to pay the entire balance, you should still file your tax return to avoid any penalties. An installment agreement can be requested from the IRS OnlineYou can also complete the form below Form 9465. If you have an approved payment program with the IRS, the failure to pay penalty will be reduced.
How much does it take to file a tax extension request?
You can file a tax extension electronically or by mail for free. However, if you don’t file an extension or do not file your taxes by April 18, it could lead to a costly error that we will discuss later.
No matter how much tax you owe, a Tax Extension is not a Payment Extension. To avoid a penalty, your tax payment must be at least 90% of the current year’s tax or 100% of the prior year’s tax. Withholding must be at minimum 110% of total tax due for the previous year for married couples with adjusted gross incomes of $150,000 or more (or $75,000 if you file separately).
You can generally avoid the penalty if your owing less than $1,000. For certain people, like farmers, fishermen, and certain household employers there are special rules.
How to file a tax extension
When you pay electronically, there is no need to submit additional paperwork. An extension is processed automatically by the IRS when you pay all of your estimated income tax online.
If you are unable to file an extension, you may apply for one Please complete Form 4868. You can either use the IRS efile or fill out a paper form, and send it in.
The form will ask for personal information such as your address, Social Security Number, estimated tax liability, and estimated tax liability. If you are filing with your spouse, you will also need their Social Security Number. Non-residents will require an individual taxpayer identification number, (ITIN). You can get one if you don’t already have one. You can apply through the IRS to get one.
You can pay part of your estimated tax liability if it is known that you owe the money. Use the Calculator for tax withholdingFind out what you are expected to pay.
Cook states that if you owe the IRS you can make a payment. You can still file if you don’t have the funds to make the payment. [your tax return]Failure to file is a serious offense.
You can file Form 4868 electronically and choose to mail a check rather than making payment online. However, you will need to attach a paper copy of the electronic filing.
“Form 4868″ can be filed electronically, or by mail. [although]Cook says electronic is preferred.”
This does not apply to federal tax extensions. To find out if your federal extension extends to state returns, you will need to contact your local tax authority. After April 18, you cannot file a tax extension.
What happens if you miss the deadline for filing a tax extension request?
You can be fined by the IRS if you do not file your taxes before the deadline. You will be chargedThere is interest on the unpaid balance, and a penalty for late payments. These penalties range from 5% up to 25% of the amount owed each months.
The penalty for failure to file is 5%, and the penalty for failure to pay is 0.5% of any unpaid taxes per month or partial month. This can be up to a maximum limit of 25%. Failure to file penalties for both failure to comply and failure to pay are reduced together. Returns more than 60 calendar days late are subject to a minimum penalty of $435 or 100% depending on how much tax is due.
Your late fee for 2022 is 5% if you miss April 18, the deadline to file your return. For $1,000 owing, there is a $500 penalty (4.5% penalty for failure to file and 0.5% penalty for failure to pay). This does not include interest. Cook states that interest will be charged on any unpaid amounts until the bill is fully paid.
The bottom line
You should file a tax extension if you are unable to meet the April 18 deadline. Although it doesn’t increase your tax liability, it can extend the time for filing your taxes by six months. It doesn’t matter why you need an extension. If you aren’t sure you can meet the IRS’s original deadline, you can take advantage of this extension.
