Not ready for the April 18th IRS deadline? Here’s what you need to know about filing an extension for your income tax returns.
Posted in: JustAnswer
With the official IRS deadline for filing income tax returns just weeks away, procrastinators are beginning to panic. On JustAnswer we see this firsthand, as the number of questions our Tax Experts receive typically spikes by more than 60% from mid-March on and increases even more in the final countdown to April 18th. And as the panic among taxpayers builds, one of the most popular question topics in April on JustAnswer is always around filing an extension on your return.
JustAnswer Tax Experts such as Angela Anderson report that confusion is high about such things as:
- Does filing an extension mean I get longer to pay the IRS what I owe?
- If not, what’s the point in filing an extension at all? What happens if I just don’t file or do anything?
- What is the deadline to file for an extension?
- How do I calculate an estimate of what I owe if I haven’t completed my return?
- Does filing for an extension increase the odds I will be audited?
We sat down with Angela to get answers to these questions and more.
Why You Should File For An Extension if Your Return is Not Ready by April 18th - And What Happens If You Don’t
If you’re not ready with your completed return or are still lacking some of the backup documents or paperwork you need, it’s a good idea to consider filing for an extension, which provides the taxpayer six extra months to file his or her tax return. For 2021 tax return, the extended due date for personal extensions is October 17, 2022. However, it’s important to know that it’s only an extension on filing of the paperwork with the IRS – not on payment of any amount you owe the IRS and/or state on your earned income.
Also, keep in mind that if your state imposes tax on personal income, in some states you will be required to file an extension as well. In Some states, the taxpayer receives an automatic extension. Meaning, the taxpayer does not have to file the extension. Currently, there are twenty-four states that accept automatic extensions for the Form 1040. For a list of those states, refer to the following link: https://kb.drakesoftware.com/Site/Browse/16498/States-That-Accept-Federal-Extension
If a taxpayer does not file for an extension, there is the possibility that they will get hit with a “failure to file” penalty. In addition to failing to file timely (excluding filing the extension), if the taxpayer owes, they will likely get hit with a failure to pay penalty as well. If a taxpayer does not owe taxes and does not file an extension or file the tax return on time, generally, there is no penalty. However, as previously mentioned, if the taxpayer owes and does not file an extension or file the tax return timely, they are looking at the “failure to file” as well as the “failure to pay” penalty.
Some states also impose similar penalties. Be sure to check with your state’s Department of Revenue, etc. to find out what the penalties are for failure to file and failure to pay.
Filing an extension will eliminate the failure to file penalties if you owe taxes.
How to File for An Extension
For individual filers (Form 1040), the deadline date to file an extension for tax year 2021 is April 18, 2022. The extension deadline date is the date that the tax return is due, which is normally April 15th. However, for TY 2021, we get three extra days to file the return or file the extension. The extension needs to be filed or postmarked on or before the tax deadline due date and you can only file one extension for your personal tax return per year. Do not wait until the last minute to file the extension and if you mail the extension, mail with some kind of tracking to serve as proof that the extension was filed just in case the IRS says that they did not receive it.
The personal extension form number is Form 4868. Except for a sole proprietorship and Single Member LLC, the extension form number for businesses is Form 7004. Extension forms can be e-filed or mailed. There is generally a fee to e-file the extension. If you electronically file the extension, be sure to have your previous year tax return available. For verification purposes, you will be asked to provide your Adjusted Gross Income (AGI) for the previous year.
To calculate what you owe if you have yet to prepare your return, you can use one of the many tax calculators that are online. These calculators ask some general questions that will let you know if you will owe or if you will receive a refund. You can also use your previous year tax situation as a guide as well. If you owed in the previous year and nothing has changed for the current tax year, it is a good possibility that you will owe for the current year as well.
Note: If you’re living outside of the country, you’re allowed two extra months (generally until June 15) to file your return and pay any tax due without requesting an extension if you are a U.S. citizen or resident alien, and on the regular due date of your return you are either:
- Living outside of the United States and Puerto Rico, and your main place of business or post of duty is outside of the United States and Puerto Rico, or;
- In military or naval service on duty outside of the United States and Puerto Rico.
Where to Get Help if You Still Need Help
Here’s some good news for the tax procrastinators out there. Starting April 4th and running through April 18th deadline, JustAnswer is offering a free “Tax Chat” site at https://www.justanswer.com/taxchat that enables you to chat online with our live, credentialed tax specialists for answers to your specific and personal tax concerns – including how to file for an extension and whether that makes sense for you. Not only is the service free, but it’s a heck of a lot faster than waiting online with the IRS 800 hotline to speak with a real-life human about your concerns.
And don’t worry, you’re not alone. About one in three (33%) of all taxpayers wait until the last minute to file their taxes, and about one in ten file for an extension, according to the IRS. JustAnswer is ready to help you whenever you decide to tackle that return.