The tax day is approaching, and everyone gets busy to file their tax return by the deadline, which is April 15. Some people might need more time for preparing their return, because of personal obligations or many other reasons, so they need to apply for a tax extension. To get an extension of six months, they need to submit their request to the internal revenue department. Many people consider it to be a lengthy and time-consuming process, while in reality, it is very easy and simple provided one is aware of the process and rules involved.
People requiring an extension to file their income tax return need to file the Form 4868. It is the Application for Automatic Extension of Time to File U.S. Your individual income tax return and this should be done before April 15. The process of applying for a tax extension is very simple, and people have the option of either doing it on paper or electronically. Whichever option one selects, they are required to enter some identifying information, such as name, social security number, address, etc. Other information required to be submitted includes the estimated tax liability for the year, total payments made, the amount being paid and the balance due.
Five simple steps to follow when filing a tax extension.
- Before starting to file a tax extension, it is wise you understand the features of tax extensions and the limitations that comes with it. An IRS tax extension essentially allows one to postpone the filing of tax returns by 6 months but doesn’t permit you to do the same on tax payments. If you owe taxes to the government, then you are liable to pay them up on or before April 15. So, it wouldn’t be a smart to file for an extension hoping you could delay the payments.
- Secondly, though an extension, move your tax filing date to October 15, the last date to file an extension remains April 15. If you fail to do so, you must pay the penalties for late filing, which would be 5 percent of the unpaid taxes on up to a maximum of 25 percent of your overall taxes. Also, if you are unable to pay the due tax amount before April 15, the failure-to-pay penalty gets added to the failure-to-file penalty. Generally, failure-to-file penalty is more than the failure-to-pay penalty.
- So no matter how busy you are, it is necessary to file a tax extension before April 15 to avoid penalties. The first thing to do in this regard is to get your hands on the form 4868 if you are filing as an individual and form 7004 if you are filing as a business entity. These forms can be accessed online, either on the IRS website or free e-file providing websites. Your name, contact details, and social security number are the only things you would need to complete the filing. E-filing, if you want to, can be done within 5 to 6 minutes. Yes, a tax extension is that simple!
- Remember to make no entry mistakes or provide incorrect information as this could be a reason for the IRS to disapprove your plea to extend. The IRS approves of an extension, no matter what the reason. One of the perks of e-filing is that you can track the status of your application and also receive a confirmation mail once you get the approval.
- Lastly, gather all the documents you would need for the in-depth research you have to make and try filing a tax return that’s as accurate, as possible so that you owe the least taxes and get the best tax refund.
These are the five simple points you must know how to file a tax extension. Go through more details about how to file a tax extension on the IRS website. If you are almost ready with your tax returns before the April 15th date, rethink on the idea of extending the deadline to get it out of the way.
Applying for a tax extension gives people extra time, which can be used for collecting, reviewing, preparing, completing and submitting their tax return, thus taking away the stress or eliminating late filing penalties. Requesting for an extension is quite convenient as people applying for the same are not required to specify any reason for doing so. Once the form has been filled and submitted, the permission is granted automatically. In case the request for tax extension gets denied due to any reason, then the IRS will get in touch with them.