Filing a tax extension is a very simple task though some people find it very hard and engaging. As a taxpayer, this is one of the most important tasks that you need to do to avoid any problems in the future. Since filing tax extension is one of the problems that a good number of US citizens face, this article is here to help you in every aspect. Apart from learning how to file a tax extension, you will also learn other basics related to the same. So, prepare to learn.
What is a Tax Extension?
This is a sixth-month period that is allowed to the U.S taxpaying citizens to file the income tax return. This period is for those who aren’t able to file the tax returns by the due date. However, laws abiding this rule vary in different states across the US. This is achieved through filing the tax form 4868. After filing the 4868 form, you are granted the sixth month period which is usually up to October 15. You need to note that there are variations in the extension period among different parties as you will learn later on.
April 15 is the date for filing Form 4868 but if you are outside the US or Puerto Rico by that time, the government gives you up to June 15 to file. Form 4868 comprises of the following information and you will be asked to provide details for.
- Your address and Social security number.
- Your name and that of your spouse in case you have one.
- The balance you owe.
- Total of the previous payments you’ve made towards your tax obligation.
- The amount you’d like to pay.
After filing the form, the easiest way to submit is through online means where you have to access the e-file website. The internal revenue service of the United States federal government says that there are several ways of making the payments for your file returns. The methods include; payment by electronic means, direct payment means, and payment through a debit or credit card.
As a taxpayer, you need to know that failing to file the tax extension may draw you to a penalty and you may face charges that are 10 times more than what you were to pay. In some cases, you may submit Form 4868 and get rejected due to any given reason. If that happens, refile the form and submit at no extra charges.
How to Get the Form 4868
Getting this form to fill the requirements and submit is easy. All you have to do is accessing the IRS website and download the form. This form comes with different email addresses on it that will direct you where you will send the form and the payments regarding your residing state. After that, you will be required the send the extension form via a certified mail.
Different Ways of Filing Tax Extension
For convenience purposes, the IRS allows all taxpayers to use the following ways to file the tax extension.
1. Using Direct Pay to the IRS Website
An automatically file extension will be done for you by the IRS provided that you’ve made a direct payment. The added advantage of this method is the fact that you can pay all or part of the estimated income tax.
2. TurboTax Easy Extension
By registering to the TurboTax website, you will be granted an extension program that is easy to use. All you will be required to do is accessing the website and provide the needed information. Thereafter, TurboTax will direct you every step you need to undertake. The site gives you easy instructions just to ensure that you grasp every aspect and that you don’t make any mistake.
3. Using FileLater
FileLater is another online platform that helps you to file extension. However, you will be required to make some payments as follows; $ 29.95 for a personal tax extension and $34.95 for business tax extensions, trusts, Partnerships, Estates, and LLCs. The site will provide you with the estimate of federal tax in consideration of your income and other wages.
4. H&R Block
This is an online tax filing extension. It will cost you nothing if you choose the standard deduction. If your tax situation is quite complicated, you will have to pay $49.99.
5. Free file Fillable Forms
It’s a free tax filing service that is sponsored by the IRS. It is also hosted by the Intuit. With this site, you will be guided in each procedure to ensure that the process is successful. However, state extensions are not supported making it unfriendly.
This site offers a free trial feature that you can use if you can’t afford the paid services. Here, you will have to fill the 4868 form and later download it to your PC for printing.
This is a free online file extension that allows you to choose whether you want to estimate your tax or file extension. This comes after you provide your personal information to the site which is always requested at the beginning. You will also be given the option of downloading the 4868 form to mail it. The good thing with this service is that it lets you set a direct withdrawal that is mostly from your checking or savings account then pay your tax liability.
Other ways include the mail-in form 4868, and smart.
Is There Any Importance of Filing Tax Extension?
There are a couple of benefits of filing tax extensions as you will see in this section.
1. It Helps Reduce Penalties
Through filing a tax extension, you will be able to reduce penalties. There are two types of penalties that a taxpayer can face. A penalty due to late filing and a penalty due to late payment.
2. Accuracy Benefits
If you are after the April deadline, you may be in a hurry which could result in making mistakes in filing. Such mistakes would, in turn, lead to rejection. However, if you are to file a tax extension, you will have ample time to fill in all details with a lot of accuracies.
3. It Preserves Your Tax refunds
When you file an extension, the statute of limitations is extended by six months which preserves your ability to receive your federal tax refunds.
4. It Offers a Good Time to Make Proper decisions
Filing tax returns may be easy but it requires good decision making which could see you seeking help from relevant people who are professional and well-informed on the same. Seeking help from the relevant people will help you figure out if you are qualified for certain credits and deductions. Filing an extension will help you get extra time for all these prerequisites.
5. You Can Save Some Bucks
You all know some accountants tend to raise the service fees some days before the April deadline then lower them aftermath. If you file an extension, you will avoid these charges.
What You Need to Do When You Miss Both Deadlines
You cannot play hide and seek with the IRS. Failing to file returns in both deadlines makes penalties pile up. You may not take action because the IRS may not seem to be on your door. Nevertheless, if you miss both deadlines, do it immediately. In case you’re not in a position of paying the whole amount or at least 90%, below are some useful tips that can help you.
- If you still have a huge debt, try the installment plan if you are eligible. Although you will pay the amount in incremental, you won’t run in jeopardy of drawing in a penalty.
- You can choose to apply for a full-payment agreement if you know you can settle the debt within 120 days.
- If none of these works for you, there is still a chance where the IRS gives you an offer in compromise. The offer will see you pay a very low amount than the actual debt that you owe.
However, dealing with this issue can be very hard which is why you are advised to seek help from a specialist and see what you can do.
More information about filing a tax extension
Due to different reasons, you may be unable to pay the taxes in April or even in October (the deadline). IRS allows you to set up an installment agreement where you will be able to pay the debt incremental over time. Below is some useful information worth considering.
The Extension isn’t Meant for the Payment
Filing extension guarantees you an additional six month period to file your taxes. Some people have been misled with the word extension. The truth is that the extra six month does not extend the payment period instead, it’s extra time for filing taxes. This means even if you file a tax extension, you will be required to pay the tax due to the normal deadline. Please reconsider this if you were a victim of the same.
Requesting an Extension Can be Done Through TurboTax
Filing an extension through the paper method is still widely used and allowed though it’s some kind of old-school. TurboTax Easy Extension is there to help you do that online for free. After filing an extension, you will be notified via email if the request is accepted or not.
IRA Contributions Don’t Have an Extension
The time you will be required to make the IRA contribution doesn’t get affected by filing an extension.
Combat Zone Personnel Have Additional Time
A combat zone is an area where there is war or conflict and the armed forces are actively engaging – as defined by the IRS. The IRS understands what the combat zone personnel go through which is why as other ordinary taxpayers are required to meet deadlines, the members of the armed forces who are serving in the combat zone are given an extension. According to this rule, the armed forces personnel serving in the combat zones are allowed to make file returns and pay taxes for a period of up to 180 days after the active service in the zone is over. In case they get hospitalized due to injuries that resulted from the service, they are automatically given 180 days to make the file returns and pay taxes once they are discharged.
Overseas personnel also Have an Extension
This has been said before though in a shallow description. Here comes the deal. There are those US citizens who are living overseas, not necessarily being in a combat zone, are eligible for tax filing extensions. If you are also a member of the active military who is assigned outside the US or Puerto Rico, you will have a two-month filing extension period. However, you need to understand that the extension is for the file returns and not for paying tax.
Although the combat zone personnel and the oversea military personnel have an automatic exemption, they are expected by the IRS to submit forms requesting for the exemption. Therefore, the process is not automatically as such. A little hands-on will be required.
Some are staying in the US but have faced some disasters such as fire or any other natural disaster. Failing to pay penalties may be disregarded by the IRS. However, you should be in a good position of verifying it.
As a US-based citizen and taxpayer, this information should have helped you in a certain way if at all you had challenges on how to file a tax extension and the related topics. Paying tax shouldn’t sound like a job instead, you should be able to do every process softly and be comfortable that you are paying tax because it’s for the benefit of the entire country.
However, comprehensive this guide could be, you may still be facing challenges. If that’s the case, it’s good to seek help from the relevant individuals so that you don’t confuse things and find yourself on the dark side. You should also ensure that you understand how the laws are requiring you to do in your state since they slightly differ among different states. As a lost note, please consider using TurboTax it will help you a lot. Remember you can’t dodge the IRS. The simplest shortcut is to comply with the law and pay taxes for you to be on the safe side.