The deadline for filing individual tax returns can sneak up on anyone. Life gets hectic and there are a number of reasons that you may forget to file your return by the deadline of April 15th. You can either get too busy or even completely forget about the deadline and that is understandable. If this happens to you there are two choices available; either rush to get your taxes done by the deadline or file for an extension. If you feel comfortable going with the first option that is perfectly fine but if you don’t want to have to rush or if you are having an accountant file your taxes you may want to have an extension filed with the IRS.
For those who file their own taxes the form that you want to file is the IRS form 4868: Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. This form can be filed either by mail or electronically through a wide variety of programs. The IRS has a few suggested programs that can be used to accomplish this task (IRS). Filing for an extension of time allows for six months of extra time to file a completed form 1040 to the IRS. There are a few items to note when going this route for filing taxes.
It is important to understand that filing for an extension with the IRS does not mean that you don’t have to pay your taxes. The estimated amount for taxes owed to the IRS is still technically due by the tax filing deadline for the current year (April 18th). However, with the extension you have the option to not make that payment until you file the finished return but doing so will cause any balance due to the IRS to start accumulating interest and/or a penalty.
So what is needed to file the 4868? Filing this form is actually not as difficult as it may seem. Completing this form requires your personal information so that the IRS can identify which return this form should be connected with. For the tax portion of the form there are essentially three lines that need to be filled out with important tax information. The first is your estimated tax liability for the year. This number just needs to be a reasonable estimate because according to the IRS, if they later find that the estimate was not reasonable, the extension will be null and void. This sounds somewhat daunting but it isn’t as bad as it sounds. If you submit reasonable estimates, you will more than likely be ok. A reasonable estimate can generally be calculated by using your gross wages for the year as a base for calculating tax liability. The second piece of information is the total amount of payments that you have made during that tax year.
This includes any estimated payments to the IRS as well as any federal withholding that has been taken from your wages. By subtracting the payments made from the estimated tax liability, the outcome is either the amount refunded to you or the amount of taxes still owed. Only place amounts still due to the IRS on the form. If you are due a refund do not put that information on the form. Along with the form, you can make your payments based on the amount due. With that completed, you can file your extension and upon approval by the IRS, you will be allowed 6 extra months to complete your individual return.
Some restrictions apply. For more information visit the IRS website or contact your financial adviser. All information given is for information purposes only