The April 18 tax deadline is shortly approaching. If you happen to haven’t filed your taxes but and are beginning to really feel the stress, you’re not alone. In keeping with a current IPX 1031 survey, one-third of People say they wait till the final minute to file their taxes. But when tax season snuck up on you this yr, there’s no have to panic — you possibly can all the time request a tax extension.
What’s a tax extension?
If you happen to want extra time to file your particular person federal earnings tax return, you possibly can request an automated extension from the IRS utilizing Type 4868. The submitting deadline to request a tax extension is identical as submitting your return, April 18, 2022.
A tax extension offers you an extra six months to file your taxes; this yr’s tax extension due date is Oct. 17, 2022.
Will submitting a tax extension give me an extension of time to pay my tax invoice?
No, a tax extension solely provides you extra time to file your return; it doesn’t offer you additional time to pay any taxes you owe. You could pay your tax invoice by the Tax Day deadline to keep away from late fee penalties.
Once you request a tax extension with Type 4868, you possibly can estimate and pay your whole tax legal responsibility for the tax yr. To assist estimate your potential tax legal responsibility, attempt to full your return as a lot as doable, estimating wherever needed.
What are the professionals and cons of submitting a tax extension?
Submitting for an extension is a wonderful choice for a lot of taxpayers who really feel harassed about tax season or produce other commitments on their plate and simply want extra time.
Requesting an extension from the IRS can also be a simple course of, and also you don’t want to present a compelling motive why you want extra time to file. As long as you submit your extension request type on time and appropriately, approval is usually automated, and also you’re granted an extension.
The draw back of submitting a tax extension is that it solely provides you extra time to file, no more time to pay. As mentioned within the final part, you’ll nonetheless have to estimate and pay any taxes you would possibly owe by the tax submitting deadline (April 18 this yr).
One other entice many extension filers fall into is ready too lengthy to file. Although an extension provides you an additional six months to finish your earnings tax return, it’s all the time greatest to file it as quickly as doable. The longer you wait, the extra possible you’ll neglect what occurred in the course of the earlier tax yr.
When ought to I file a tax extension?
The IRS doesn’t require a motive for requesting a tax extension and often grants them with out situation.
Some widespread causes for submitting an extension request are:
- You don’t have all of your tax varieties and monetary data but
- You might have an emergency that stops you from finishing your return
- You want extra time to make a contribution or change a retirement plan
- You need to make elections in your return, however you gained’t know which elections are greatest till later within the yr
Irrespective of your motive, in the event you want extra time, simply ask for it!
When shouldn’t I file a tax extension?
Since submitting for an extension solely provides you extra time to file however no more time to pay your taxes, you shouldn’t file an extension in the event you can’t pay your tax invoice.
If you happen to owe cash you possibly can’t pay, an extension gained’t be useful. As a substitute, the IRS gives fee choices and can work with you to ascertain a tax fee plan settlement to interrupt up your tax invoice into smaller funds over time.
In case you have no tax due this yr and also you’re owed a refund as an alternative, you’ve gotten as much as three years to file a return and declare your refund cash. There is no such thing as a penalty for submitting a tax return late when you don’t have any steadiness due, however in the event you’re owed a refund, be sure to file so that you don’t miss out on that additional money.
We stated it earlier than, however we’ll say it once more — tax submitting doesn’t get any simpler as time goes on. Wait too lengthy, and you could threat forgetting important particulars in regards to the tax yr if it’s not recent in your thoughts. This might imply lacking out on potential deductions or tax credit.
How do I file a tax extension?
To request a submitting extension in your private taxes, you will want to make use of IRS Type 4868. TaxAct® lets you full Type 4868 in your federal tax return and file any needed state extension varieties while you e-file. You may as well print a paper copy and ship it to the IRS through snail mail.
Your extension request type requires you to offer easy details about your self, corresponding to your title, Social Safety quantity, and tackle. If any of that data has modified for the reason that final time you filed, you should definitely notify the suitable organizations earlier than you apply in your extension. For example, it’s best to notify the Social Safety Administration in the event you modified your title. If you happen to moved just lately, it’s best to notify with Type 8822.
How do I understand how a lot tax to pay with my extension?
To complete Type 4868, it is advisable estimate how a lot tax you owe. The shape helps you calculate this quantity by estimating your whole tax legal responsibility for the yr and subtracting any funds you’ve already made. If you happen to select to file an extension utilizing TaxAct, our tax software program helps calculate your estimated tax invoice primarily based on the data you enter.
One downside many taxpayers run into shouldn’t be having all their tax data but. If you happen to’re nonetheless ready on vital tax paperwork, simply attempt to full your return as greatest you possibly can. Reasonably than leaving one thing out, attempt to use estimates for any numbers you don’t have but.
If you’re utilizing TaxAct, click on Mark as Estimate for any data it is advisable double-check earlier than formally submitting your return. You may as well use our separate Revenue Tax Calculator to assist estimate your quantity due.
When unsure, it’s higher to overpay than underpay. If you happen to overestimated your tax invoice and paid an excessive amount of, you’ll obtain a tax refund for the overpayment. Nonetheless, in the event you underpay, you may be chargeable for paying curiosity and penalties. The excellent news is that the penalty for paying late while you’ve requested an extension is considerably lower than in the event you didn’t obtain an extension.
What ought to I do after submitting a federal extension?
The six-month extension interval is usually extra time than most of us want.
Listed here are just a few steps you possibly can observe to assist preserve your tax return on monitor:
- Fill out your return as a lot as you possibly can.
- Maintain monitor of the tax gadgets you continue to want by making a guidelines.
- Maintain your tax paperwork organized.
- End submitting your tax return as quickly as you possibly can.
What about state earnings tax extensions?
If you happen to dwell in a state that costs earnings tax, you’ll have to file an extension in your state taxes and your federal taxes. Normally, a state extension provides you extra time to file, no more time to pay.
Some states will grant you an automated six-month extension in the event you’ve filed for a federal tax extension, however not all the time. Once you file with TaxAct, we make it straightforward for you. We stroll you thru finishing Type 4868 in your federal return and give you any needed state extension varieties.
Can I file a tax extension for my enterprise?
Sure! Sole proprietors and single-member LLCs can use the identical Type 4868 for particular person returns.
Enterprise homeowners of partnerships, multi-member LLCs, and companies even have the choice to file a tax extension for his or her enterprise, although some issues work a little bit in another way. For example, the deadline for partnerships and S companies to request an extension was March 15.
