Though it comes at the same time every year, tax season always seems to sneak up on us. Yesterday you were opening gifts and counting down the New Year, now you’ve suddenly got to track down your W-2 and make decisions about deductions and dependents. If you find the filing deadline approaching fast and don’t feel prepared, you may be considering a tax filing extension. But remember, while receiving an extension on your taxes can be helpful, it can also result in added fees.
Theoretically, anyone who has to file their taxes may be eligible for an extension. Certain individuals are automatically eligible, and more info on automatic eligibility can be found here. For the rest of us, receiving a standard 6-month extension often requires filing a special form either electronically or through the mail, by the standard tax filing date of April 15.
How does it work?
If you’re using the IRS’s e-file option and want an extension, you may need to complete Form 4868, known as “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.” If you’re filing with a tax professional or using tax-filing software and still need an extension, make sure to include this form in your filing requests. For those individuals filing through the mail, the paper version of Form 4868 should be submitted to the address found on the form instructions.1
Many of the details about requesting an extension can be found here, but the most important thing to remember about receiving an extension on your tax filing date is that it could end up costing you more. Even if you receive an extension from the IRS, they will likely still charge you interest on the amount of taxes owed. And that’s not the worst of it — if you don’t file taxes, and fail to receive an extension, the IRS may charge as much as 25% interest on the amount you owe.2
Requesting an extension on your taxes is certainly an option if you’re worried about missing the filing deadline, but filing on time remains the best option for you and your bank account.
Remember, you can always get more information on tax extensions at IRS.gov.
1IRS.gov. (n.d.). Publication 17 (2013), your federal income tax. Retrieved from http://www.irs.gov/publications/p17/ch01.html#en_US_2013_publink1000170518
2Schwartz, A. (Feb 6, 2012). Get a 6-month tax extension. Retrieved from http://www.investopedia.com/articles/pf/07/taxextension.asp