Filing For a Tax Extension

By: Robert Thomson Click author's name for more of his/her articles

If you cannot make the April tax filing deadline, don't worry. Filing for a tax extension is as simple as filling out Form 4868 (officially known as Application for Automatic Extension of Time to File U.S. Individual Income Tax Return), which grants taxpayers an additional six months to file a return. By filing Form 4868, your deadline is extended to October 15. The one caveat is that if you owe any taxes, you will still need to file 90% of the outstanding balance by April 15 or you will accrue fees and penalties regardless if you file for an extension or not.
Here are some basic steps you should know when filing an extension:
If you file non-electronically, you can pick up a hard copy or reproducible copy of Form 4868 at any available library or IRS office near you. You can also download a printable copy of the form at the Internal Revenue Service's website, or call 1-800-TAX-FORM (1-800-829-3676) to have the form mailed to you. As most downloadable forms are in PDF format, you will probably need to download a copy of Adobe Acrobat Reader.

If you file electronically, you can submit your completed extension form with most online tax preparation software. The IRS also provides online tax filing. Even if filing online, you still must make the deadline, so allow yourself an additional five to ten minutes to submit the extension.

Note that the penalty for not filing on time is a minimum 5% per month up to a maximum of 25% of the balance due. However, if you do file timely but neglect to pay any of your balance, the penalty is 0.5% per month, plus a monthly interest charge. So it is smart to file an extension, especially if you think you owe taxes.

If you are not sure how much you owe, you need to estimate your taxes. The internet provides calculators and applets that take you step-by-step in estimating your tax liability. Once you have properly estimated your taxes, enter the amount on line 4 of Form 4868. It is always best to err on the side of caution, so you should probably over-estimate what you owe to avoid penalties.

For military personnel serving in combat zones, tax deadline extensions are calculated based on the amount of time served in a zone before taxes are due, any time continually hospitalized (up to 5 years) for injuries incurred during combat and are for 180 days beyond the periods calculated above. This extension applies only to time served in a combat zone. If you are initially deployed to a non-combat area and afterward moved to a combat zone, the tax extension is calculated from the date of your arrival in the combat zone.

If you live abroad, you can request a discretionary 2-month extension in addition to the 6-month extension. To make this request, you need to write to the IRS to explain the reason you need the additional time. The request must be sent by the extended due date of October 15, and you will only receive notification if your request is denied.

Note that you are prohibited from filing an extension if you expect the IRS to calculate your taxes or if you are required by a court order to file by the regular deadline date. The IRS Telefile phone service is no longer available to file returns or extensions as the service was discontinued in 2005.

Good preparation is instrumental to simplifying the tax filing process. If you think you need additional help, find a good tax counselor and be sure to file in a timely manner.

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