If you need more time to file your federal tax return, it’s possible to apply for an extension of up to 6 months. By filing for an extension, you can avoid making tax mistakes and make sure you are adequately prepared to fill out your return with no rush. A tax extension is free, not dependent on your income, and sometimes automatic. The only thing you must do to qualify for the extension is estimate your tax liability on the form and pay any amounts that are due.
Some people automatically receive an extension if they meet certain criteria. If you work in a combat zone for the US Armed Forces, live and work abroad as a US citizen, or live in an area of the US hit by a severe natural disaster, there is no need to file for an extension. However this isn’t the case for most people. Many assume that tax extensions won’t be accepted and don’t even bother to file one. They have no idea they’re missing out on some benefits that might really help them. Here’s just a few:
Avoid Harsh Penalties
It’s important to remember that an extension does not change your tax payment deadline. You can avoid the late-filing penalty of 5% of your balance per month by applying for the extension. If your balance is unpaid by April 15th but you file for an extension, you will only pay 0.5% of your balance per month.
More Time to Receive Your Tax Refund
Doing this can also preserve your tax refund. There is a three-year deadline for receiving a refund check if you are owed one by the IRS. This three-year statute of limitations is also extended by 6 months when you file for an extension, meaning there is more time for taxpayers to receive their refunds if they are behind on submitting their tax returns.
Save Money on Tax Preparation Fees
Another thing to consider is that accountants tend to raise their prices when it is close to the April deadline. For the frugal taxpayers, it makes sense to file for an extension if you are looking to save on your tax preparation fees. It also allots you more time to convert to a Roth IRA or traditional IRA and reap the tax benefits.
Make Sure You’re Prepared
If you are missing any of the necessary forms needed to file your taxes, don’t make estimations about your income and risk having to make corrections later. Learn how to file for a tax extension online and spare yourself the stress of filing before you are ready to.
All you need to is:
• Your name
• Address
• Social security number
• Estimate of total tax liability
• Total already paid for the tax year (includes both withholding and estimated payments)
• The amount you are paying along with the extension.
• If you are filing jointly with a spouse, you will also need to include their full name and social security number.
How to File Online
If you are paying your taxes online, you can receive an extension through the IRS payment portal and skip filing a separate form. If you choose to do the process in two steps, you will need to fill out IRS form 4868. Depending on your income, you’ll either have to use Free File Software, or Free File Fillable forms.
It’s important to note that filing for an extension is not a way to delay paying, and failing to file on time can lead to larger penalties than you would incur by failing to pay. A tax extension is the prime way to avoid any unnecessary fees. Most of the time, the IRS will not even require that you explain your reasoning for requesting one, and it will not prompt an audit. Filing for an extension is a good option for those who are dealing with an unexpected life event, extra time to ensure your paperwork is complete and accurate.
Source: Proshareng
