Tax day is here, and while it's always a good idea to file as soon as possible, there could be reasons you may need some extra time. Maybe you moved and don't have all of your paperwork in order, or an unexpected life event is preventing you from filing by the April 15th tax deadline.
If you're left scrambling and need more time, here are five things you should consider before filing a tax extension.
1. Extensions can be filed electronically: If you need to request a six-month extension, the IRS requires you to fill out Form 4868, and there are a few ways you can file it. The most convenient is to use e-file services like TurboTax Easy Extension. E-filing your extension guarantees a confirmation email from the IRS within 48 hours of filing. If you decide to print out and mail the extension, you will not only have to wait in line at the post office, you will not receive a confirmation of receipt from the IRS and may be left wondering if it's been processed.
2. Taxes owed are still due by April 15th: If you owe taxes this year, you're required to send the estimated taxes due to the IRS along with your extension request. Extensions only increase the amount of time you have to file the paperwork, not to pay taxes. If you expect to owe, you should complete your return and send in your payment to the IRS as soon as possible to minimize penalties and interest.
If you're still not ready to file, it's best to estimate your taxes owed and send that amount to the IRS. Then the penalties and interest you owe will be assessed only on the amount you underpaid. If you overpay, the IRS will return the difference to you.
3. Your extension request could be denied: Any errors or inaccuracies on Form 4868 could cause your extension to be rejected by the IRS. Double check to make sure that all your information including your name, address and social security number are correct. An extension rejection could lead to a failure-to-file penalty -- not to mention a big headache down the road.
4. A federal and state extension will be required: Most taxpayers who file a federal income tax return also file a state income tax return. While the IRS requires you to file Form 4868 to request an extension, each state has its own requirements for obtaining an extension. Some states including Wisconsin, Alabama and California offer automatic six-month extensions to file your state income tax return without having to file an extension form. Other states, such as New York, will grant you a six-month extension, but you must request it. You can access your state tax authority's website for more information, or have tax preparation software like TurboTax automatically generate it for you.
5. Your return will be due on October 15th: If you filed for an extension, mark this date on your calendar because you will have exactly six months to file your paperwork!
Alternatively, if you're considering filing a tax extension because you waited until the last minute to file, here are six reasons why you should file now instead of filing an extension.
