Filing a tax extension is simple. If you need extra time to work through your tax documents and just don’t think you’ll be able to finish your taxes by the April 18th tax deadline, you can file for an extension.
Once you file the tax extension form, you’ll have until October 17th 2016 to file your taxes (an extra 6 months). This doesn’t mean that you get an extra 6 months to pay your taxes. That’s why it’s so important to estimate you taxes owed and pay them before April 18, 2016. Otherwise, you might end up with penalties and interest to pay the IRS.
Oh and if you still need to file your taxes this year, you can file them for free (even state) here.
How to File a Tax Extension Form
1. Estimate Your Taxes Owed
You’ll need to have an idea of how much you owe in taxes because you’ll need to send in the payment before April 18th. Gather all your tax documents and create a rough estimate of what you’ll owe.
2. Download and Complete the Tax Extension Form
The IRS requires you to download and complete Form 4868. Part I is your personal information and Part II is for your individual income tax. You’ll need to be prepared to provide:
– Estimate of total tax liability for 2015
– Total 2015 Payments
3. Return the form By April 18
On the bottom of the form you’ll mail form 4868 to the appropriate address based on the state in which you live.
If you don’t file the tax extension form in time, you may have to pay a late payment and late filing penalty.
Late Payment Penalty
From to the IRS website:
The late payment penalty is usually 1/2 of 1% of any tax (other than estimated tax) not paid by April 18, 2016. It is charged for each month or part of a month the tax is unpaid. The maximum penalty is 25%.
Late Filing Penalty
From the IRS website:
A late filing penalty is usually charged if your return is filed after the due date (including extensions). The penalty is usually 5% of the amount due for each month or part of a month your return is late.
The maximum penalty is 25%. If your return is more than 60 days late, the minimum penalty is $135 or 100% of your unpaid tax, whichever is smaller.
You Can Even File an Extension Online
Sites like TurboTax, H&R Block and TaxAct have features that allow you to file a tax extension online. Some will charge but others (like TurboTax) wont.
Have you ever filed an extension on your taxes? Do you plan on filing this year?