The possibility to ask for an income tax extension is useful because there might be situations when you are not able to meet the deadline on April 15. Fortunately, IRS has a solution for this kind of situations. We will discuss in this article how to file a tax extension and the consequences of making late payments on your tax.
How to file a tax extension
In order to file for a tax extension you first need to create a rough draft of your tax return to get an idea whether you have to pay taxes or you might have a return.
To file a tax extension you will need to use the Form4868, which you can download in PDF format from the IRS website. Fill out the form and also write a check in case that you owe tax money. Your tax should be paid in full by April 15 or IRS will calculate interest on your outstanding balance and an interest of 5 percent per month. Mail the check and your extension form before April 15. You can also pay your taxes by debit or credit card. However, these are third party services and may charge you some extra fees. It is recommended to mail them by certified mail with return receipt in order to have proof that you sent them and IRS received them.
The Tax laws relating to extensions are the Treasury Regulations section 1.6081-4 and the Internal Revenue Code section 6081.
The tax filling extension is the Form 4868. Filling the Form 4868 is relatively simple and requires you to provide identification information such as name, your social security number, your spouse’s social security number, and your address. You will also have to fill out your individual income tax information such as total payments you’ve already made, tax liability for 2013, the amount you are paying and the balance due. You will have to indicate if you fill Form 1040NR or 1040NR-EZ, if you are a U.S. citizen or a resident.
You can also file your tax extension online. It takes around five to twenty minutes to file online. If you leave it for the last day just make sure you have enough time to finish before midnight. To file your tax extension online you may use a preparation software such as TurboTax, or TaxAct or use the IRS e-file to send the Form 4868 directly to IRS computers. In case that your adjusted gross income was less than $58,000 for 2013, you can use Free File that allows you to use brand name software at no cost.
Free Federal Extension at IRS.gov
You may use the IRS Free File Forms to electronically file your application for extension. Thr online application called Free File Fillable Forms can be found on IRS.gov website, and it contains an electronic 4868 Form that you can fill out online, then e-file for free.
TurboTax Easy Extension
TurboTax Easy Extension allows you to file for personal tax extension for free. The software will take you through the necessary steps to complete your federal tax return extension application. TaxCaster, a module of TurboTax software will help you to estimate how much you will owe on your tax return or how much return you will get.
Each American state has its own rules and requirements for tax extensions. You also need to know how to file a tax extension in the state of your residence. Some states such as Wisconsin, California, and Alabama offer automatic six-month extensions to all taxpayers, while others require you to file out a specific form same way as for the federal tax. Some states do not have state income tax so you don’t need to file a return or an extension.
For special circumstances IRS has two rules. You may receive an automatic two month tax return extension without to have to file the request for an extension in case that you are a resident or a U.S. citizen who has the main place of business or post of duty outside the U.S. and Puerto Rico, and is living outside the U.S. and Puerto Rico, or if you are on duty outside the U.S. and Puerto Rico for naval or military service. For the 2013 the automatic extension gives you time until June 16, 2014, to file your tax return.
The other circumstance is referring to combat zones. If you serve in the Armed Forces on deployment outside U.S. or in a combat zone your deadline is extended for 180 days past the last day you are in a combat zone or the last day of any hospitalization for a service injury.
The Bottom Line
There are special circumstances when you may not be able to file your return tax before the regular deadline, which is April 15. For these situations IRS provides the possibility to file a tax extension, by using the Form 4868. You can file the Form 4868 whether on paper or online, by using commercial or free tax software. Requesting an extension for your tax return is simple and you can easily learn how to file a tax extension. The advantage is that you are not required to explain to IRS the reasons for asking an extension and most of the requests are automatically approved. However, you are still required to pay your taxes before April 15 if you want to avoid accumulating interest and penalty fees.