How to File For a Tax Extension
Tomorrow’s Tax Day, and if the chances of having your taxes postmarked by day’s end is about as likely as you winning the lottery, it’s time to file for an extension. You’re not alone: Approximately 10 million taxpayers will ask for extra time this year, up slightly from last year’s 9.5 million, says Nancy Mathis, spokesperson for the IRS. But the good news is that anyone can file for an extension— regardless of income level—and it’s free of charge. The extension gives you six extra months, requiring that you file by October 15. Here’s how to start the process.
Fill out the right form. Filing for an extension requires you to complete just one document—Form 4868. Download it at Irs.gov and make sure it’s postmarked or e-filed by April 15. You can also opt to file for an extension through a software program like FileLater, which for a small fee, allows you to file electronically and includes a tax calculator to better estimate how much (if anything) you’ll owe.
Pay up. Even though you’re given the extra time to file, you must pay your best estimate of how much money you’ll owe by April 15. This doesn’t apply to over two-thirds of taxpayers that file “refund returns”—meaning they’ll get some of their salary withholdings back. But if you do a lot of freelance work, filed an incorrect exemption on your W-2, or underwent a major life change, such as purchasing a new home, there’s a chance you’ll owe money. The IRS recommends completing your tax forms pre-extension as though you’re really filing, even if you’re missing some info; this will help you get the best idea of whether you’ll owe money. When in doubt, pay more. If the payment you submit by April 15 is too high, you’ll be refunded after you file. If it’s too low, you’ll have to pay a penalty—0.5 percent of the difference per month until all taxes are paid.
Know your options. Worried that between splurging on your wardrobe and vacationing in Mexico, you didn’t set aside enough money for Uncle Sam? Or maybe any money allotted was needed as emergency funds post-layoff? Don’t fret. If by April 15, you don’t have the money to pay your taxes in full, fill out an Installment Agreement on the IRS website. This will help you set up a payment plan and avoid any additional penalties.
File. Once you receive your tax extension—which is granted immediately after the IRS receives your form—you should file your taxes as soon as you can. The sooner you file, the sooner you can receive a refund. If you file electronically and choose direct deposit, you can expect your refund within 10 days. If you go postal, it takes about 6 to 8 weeks for a refund.