With the tax due date of April 17 quickly approaching, you may feel the need to scramble if you haven’t already completed your taxes. But if tax season snuck up on you this year, the good news is you can request a tax extension. That allows you an additional six months to file your tax return.
If you file an extension, you have until October 15, 2018, to get your full tax return filed, although you can always file it before the deadline as well. Filing for an extension is a great option for many taxpayers who are feeling stressed about tax season or who have other commitments on their plate.
If you have any uncertainty about whether you will get your taxes filed by April 17 this year, it wouldn’t hurt to consider filing a tax extension. Requesting an extension is easy, and it doesn’t take much time. Plus it helps you avoid penalties from the Internal Revenue Service (IRS) for being late in your tax filing. Additionally, filing an extension gives you more opportunity to find the tax breaks that work for you and ensure everything is completed accurately.
Here are a few other benefits of filing a tax extension this year.
Don’t be fooled – it actually isn’t time-consuming or difficult to request an extension on your tax return filing. And best of all, you can be automatically approved after you fill out just one form.
To request an extension on your personal taxes, you will need to use IRS Form 4868. Tax software, such as TaxAct, allows you to complete Form 4868 for your federal return, as well as file any necessary state extension forms.
Don’t forget – the deadline to file the extension is the same day as the original tax deadline (which is April 17,2018).
To file an extension, you don’t have to give a reason as to why you want an extension. Approval is automatic, so as long as you submit Form 4868 on-time and properly, you generally are granted an extension.
You can file Form 4868 online through tax preparation software or print a paper copy and send it via snail mail using a paper copy to the IRS. Choose whatever method works best for you.
To fill out Form 4868, you need to provide simple information about yourself, such as your name, Social Security Number, and address. If any of that information has changed since you last filed taxes, you need to update the appropriate organizations before you apply for your extension. For instance, you need to notify the Social Security Administration beforehand if you changed your name due to divorce, marriage, or something else. If you recently moved, update your address on tax Form 8822 to inform the Internal Revenue Service.
To finish Form 4868, you then need to estimate how much tax you will owe. The form helps you calculate this number step-by-step. All you have to do is estimate your total tax liability for the year and subtract any payments you’ve already made. If you chose to, you can submit an estimated payment on the form as well until you can finalize your tax return. If you choose to file an extension using TaxAct, the software automatically calculates it for you based on the information you enter.
It’s important to note that even if you file an extension, that doesn’t mean you have extra time to pay your tax bill. You must pay it by the deadline or be subject to late payment penalties. The good news is that the penalty for paying late when you’ve requested an extension is significantly less than if you did not receive an extension.
An Extension Can Help Prevent Penalties and Protect Yourself
If you have even a doubt that you can file your taxes on time, it’s a good idea to go ahead and file an extension. Failure to pay on time results in a penalty from the IRS, where they charge you 5 percent of your tax balance plus interest for each month your balance remains unpaid.
If you file an extension, the tax penalty is only 0.5 percent per month plus interest. That costs you significantly less. Any tax that has not been paid by April 17 is subject to penalization.
While it can cost you if you are late to pay, there are still many benefits of filing a tax extension. As mentioned, even if you pay late, you generally pay less in penalties if you were granted an extension. With an extension, you are also giving yourself more time to complete your tax return accurately, which lessens your chances of being audited.
Take the Stress Off Your Shoulders
Life gets hectic. And even those who have every intention of filing early may find they are crunched for time. Maybe you had a major life event take place, got busy at work, or you just plain forgot about tax time until now. Whatever the reason, it’s reassuring to know you can easily file a tax extension to give yourself more time.
Trying to file at the last minute is not only stressful, but it can cause you to make mistakes that could have long-term financial implications. By giving yourself more time, you can ensure you claim every credit and deduction you are qualified for.
Filing a tax extension is easy and simple to do. Save yourself the headache and consider filing your extension before the tax deadline. Using a tax software such as TaxAct can make filing an extension even easier and can take away the stress of filing your taxes.
When You Shouldn’t File an Extension
Since filing for an extension only gives you more time to file, but not more time to pay your taxes, you shouldn’t file an extension if you are unable to pay your taxes.
If you find that you owe money you can’t pay, an extension won’t be helpful. Instead, the IRS provides payment options and will work with you to establish a payment installment agreement. n installment agreement lets you break up your payments over a defined payment period.
Source : TaxAct Blog