You may have procrastinated or perhaps you haven’t tracked down all of your receipts for expenses. Whatever the case, you need time beyond April 18th to file your taxes. Although filing an extension is a fairly common, simple process, read below to know the facts and gain clarity on some misconceptions. Filing an extension requires some foresight!
The form will ask you for your identification, your total tax liability, and provide information about how to pay. It’s a simple, straightforward form. However, more information is asked if you’re out of the country (more on that below). You can fill it out in minutes, but make sure to file or postmark by April 18th. Failing to file for an extension can result in serious interest and more than a few nudges from the IRS. Don’t let your procrastination extend beyond its current state!
On sabbatical or extended vacation? If you live outside of the U.S., the form for an extension is different. It is submitted the same way as a standard extension, but requires a bit more information about how long of an extension you will need and the dates and details of your absence. Make sure you submit this one and not the regular extension to files, or penalties will accrue.
Many file an extension with the hopes that they will also receive an extension to pay; unfortunately, this is not the case. Use a tax estimator or consult your tax professional to determine how much in taxes you may owe. As outlined on the extension form, your estimated taxes are due by April 18th. If you fail to pay, or pay less than 90% of how much you owe, you will be responsible for accrued interest and your extension may be denied. This step requires extra foresight and caution, and may well take up the most time of your extension filing. We recommend paying your taxes the same day you submit your extension submission online. You have the option to make direct payments with your debit or credit card, or straight from your bank account.
Word to the wise: don’t file for an extension if you solely want more time to pay your taxes. If this is the case, file on time and request a short (60 to 120 day) extension to pay. You will still accrue interest, but at a lower rate. If more payment problems arise, consult your tax professional or the IRS directly to set up a payment plan.
You can either e-file or submit a paper copy. We always recommend electronic filing. It’s fast, easy, and free. Keep this habit, and filing your taxes will be a cinch as well!
Ready to submit your extension? As long as you submit by the 18th, it should be accepted. If you receive help from a third party, you will receive a bit more communication. Once you are approved for extension, plan out how and when you will file.
Gather your documents and refer to our many how-tos on filing – we can already tell you, you probably want to whip out Excel. If you and your tax professional determined you owe the IRS a few pennies, make a plan for repayment while sharpening your tax filing know-how. Remember that this extension does not also qualify for state taxes, as the IRS and the state operate differently.