Tax Extensions: Frequently Asked Questions |
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Like most tax-related subjects, tax extensions can be confusing for many people. If you don't know your IRS Form 4868 from your 7004, don't worry--you're not alone. Here are answers to some of the most common questions at TaxExtension.org. What does "tax liability" mean? It's a ten-dollar word for the amount of taxes you have to pay. It refers to the amount of taxes you have left to pay when you file your return (it does NOT include the amount withdrawn during the year from your paycheck). For example, if you earned $25,000 this year and you owe $5,000 in taxes--but only $4,000 was withheld from your paychecks--then your tax liability is $1,000. If you're due a refund, then happily you have no tax liability at all! If I want an extension on my state taxes too, do I have to file that separately? It depends on where you live. Each state has different regulations governing tax extension. Some states will grant you an extension if you forward them a copy of your federal tax extension form; others have their own forms you'll need to fill out. A few will grant you an extension automatically with no paperwork required--and of course, a handful of states levy no income taxes at all! Does the IRS need to know why I'm filing an extension? NO! This is one of the most common misconceptions about tax extensions. The IRS will grant you a six-month extension, no questions asked, as long as you fill out the correct forms on time (that's Form 4868 for individual income tax extensions, and Form 7004 for businesses). How do I file a tax extension? Is it complicated? It's very easy! TaxExtension.org recommends that you e-file with our partner, FileLater.com--the only online tax extension filing service that handles both personal and business tax extensions. It typically takes less than 10 minutes--you just answer a few simple questions and FileLater will electronically file your return with the IRS. All of your personal information is kept safe with the latest in data encryption technology, and you'll be informed as soon as your extension is approved. What is an "Authorized e-file provider?" The IRS has approved certain companies (including FileLater) to electronically submit tax information, which saves time and trees. The certification process is rigorous, so you can trust any company that's listed on the IRS website as an authorized e-file provider. What do I do if my tax extension gets rejected? This is a pretty rare occurrence, but not a disaster. If the IRS does not approve your tax extension, FileLater.com will notify you and explain why (it's usually a simple case of a typo or incorrect information). You can correct the errors and re-submit your tax extension at no charge. Ready to file a tax extension? In just a few minutes, you could have an extra six months on your taxes. |