If the tax deadline passed you by and you never got your return filed, then the best thing to do is take action now and file an extension. Here are a few important things you should know about requesting a tax extension.
While the tax deadline was a couple of weeks ago, on April 18th this year, it likely snuck up on some people, just as it seems to do every year. If the tax deadline passed you by and you never got your return filed, then the best thing to do is take action now and file an extension. While that request for an extension may be late, and you’ll still face late filing penalties, you can avoid additional unnecessary fees by requesting an extension on filing your return. Here are a few important things you should know about requesting a tax extension.
It’s Fast and Easy
Requesting a tax extension only takes a few minutes, and it’s automatic for most people. You can request an automatic tax-filing extension online by filling out Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. In most cases, your request will be approved almost immediately. While it’s best to do this before the tax deadline, your extension can still be approved.
New Deadline: October 15
A tax-filing extension provides you with roughly six months of extra time to prepare your tax return, pushing you due date to October 15th. If that date falls on a weekend or holiday, the due date will be pushed to the next business day, just as the normal tax deadline this year was pushed to April 18th, due to Washington, DC, observing Emancipation Day on April 15th.
You Need to Pay
An extremely important detail that many taxpayers overlook when filing for an extension is that it is an extension to file. It is not an extension on paying your taxes. When you request your extension, you must estimate your tax liability on the forms, and should pay any amount due when submitting our tax-filing extension request. If you don’t, you will continue to face late payment fees and accrue interest on any unpaid amount.
Extend When You Make a Payment
An alternative option to filling out Form 4868 as described above is to request an extension when making a payment on your estimated amount due. You can make a payment using Direct Pay, the Electronic Federal Tax Payment System (EFTPS), a credit card, or a debit card; when making your payment, simply indicate that the payment is for an extension. This allows you to avoid having to file a separate tax extension form, and you will receive a confirmation number of your payment that you can retain for your records as evidence that you filed for an extension on your return.
When You Shouldn’t Extend
It’s also important to know that extending your tax return isn’t always the best option available. Because you’ve already missed this year’s tax deadline, you are already facing late filing penalties; avoiding that penalty is typically the largest benefit to extending. So, if you have your forms ready to file now, requesting an extension doesn’t offer you a benefit. You’re better off simply filing your full return.
Additionally, because extending does require you to make a payment on your estimate tax debt, you risk underpaying on your liabilities and facing additional interest and fees on the remaining unpaid amount. If you have all of your paperwork in order, it’s best to prepare your return completely and file it, so you know exactly what you have to pay and can avoid these kinds of issues.
Get Help Filing As Soon As Possible
Regardless of whether you’re ready to file or need to quickly request an extension to file, we can help. Though it is quite simply to request an extension, estimating your tax liability is a different story. Our tax experts will go over your financial situation, help you make educated estimates on financial numbers you don’t yet have documentation for, and provide you with a professional estimate on your tax liability for 2021. The more accurate your estimate, the more accurate your payment will be, and the less likely you are to face additional fees on underpaid taxes.
To get help with filing your full tax return or requesting a tax-filing extension, contact Peacock & French, CPAs, today to speak with one of our experienced tax professionals.