Filing an incomplete or inaccurate tax return is a surefire way to raise red flags at the IRS. Instead of inviting a tax audit, it would be much more beneficial to extend your filing deadline with an online tax extension. Whether you need more time to gather paperwork, or you just don’t feel like filing on April 15, a tax extension is the best solution.
What Is a Tax Extension?
You can request a personal tax extension by filing Form 4868 with the IRS. A tax extension will extend your tax return filing deadline, but it will not give you more time to pay your taxes due. A personal tax extension will give you 6 extra months to file your income tax return, however, the IRS still expects your taxes to be paid by the original April 15 deadline. You must pay at least 90% of your tax liability by April 15, or the IRS will charge late fees and interest. Fortunately, a tax extension helps you avoid the costly late filing fees.
The IRS charges a late payment penalty of 0.5% per month on your outstanding tax balance. So if you file a tax return but do not pay all of your taxes, you will incur a 0.5% penalty on your unpaid balance, plus interest. If you also fail to file a tax return (or tax extension), the late fees increase to 5% per month, up to a maximum of 25%, plus interest charges. The minimum late filing penalty is $135 for tax returns that are over 60 days late.
To avoid owing substantial fees and interest, you should consider filing a tax extension online. E-filing an extension is easy and secure, and it takes less than 10 minutes if you use an Authorized IRS e-file Provider.
Getting an Online Tax Extension
While you could go the traditional route and print/mail Form 4868, advancements in technology have made “e-file” the best filing option. You can e-file Form 4868 using an Authorized IRS e-file Provider, and your application will be immediately transmitted to the IRS. With e-file, you get a confirmation email as soon as the IRS accepts or rejects your extension. (If you file by paper mail, you will only be notified if your extension is rejected.)
NOTE: If you need a business tax extension, you should file Form 7004 instead. Form 7004 is used to request a 5- or 6-month extension for corporations, partnerships, estates, trusts, and other business entities.
If you owe taxes for the year, you will be given the option to pay all/part/none of your taxes with your extension application. While a tax payment is not required, it is recommended for those who want to avoid late fees. As long as you pay at least 90% of your tax balance by the original deadline, you will not be subject to a late payment penalty.
The best thing about tax extensions is that they’re automatic, which means you don’t have to sign the form (4868 or 7004) or provide a reason for your request. Filing an extension online is easy and it can be done from the comfort of your own home, without a tax professional. Just make sure you use an Authorized IRS e-file Provider that is certified by the IRS to e-file tax forms. Note that most third party software providers charge a fee to e-file your taxes online.