If you've always filed your federal income tax return as early as possible so that you can quickly receive your refund, you may know next to nothing about tax return extensions. But for those who find themselves unable to meet the April 15 deadline for individual income tax returns, an extension can be crucial when it comes to avoiding expensive penalties and surcharges. Read on to learn more about the process of filing for an extension and what you can expect if this request is granted.
Why Might You Need an Extension?
There are many reasons why a taxpayer may need an extension. In some cases, a former employer's closure or another disruptive life event (like a divorce or death in the family) can leave taxpayers unable to get the forms they need to file their return until the tax due date has passed. The IRS doesn't really care why you need an extension, and unless you appear to be abusing the process, these extension requests will usually be granted. But it's important to file this request before Tax Day, as waiting to request an extension until after the due date has passed can tack on additional fees and interest charges to your total.
How Do You Apply For an Extension?
It's easy to apply for an extension by either mailing in a request or submitting your request on the IRS's Free File website. If you submit this request electronically, you can expect a response in just a few minutes, providing you with some well-deserved peace of mind around tax time. If the IRS grants your request, you'll have until October 15 to file your tax return, whether you need just a few more weeks or a few months or more.
What Happens if You Owe Penalties?
This extra six months to complete your tax return comes at a cost. If your return reveals you owe taxes or you've underpaid your taxes, you'll be assessed interest on the amount that wasn't paid by April 15. For example, if your total tax bill is $10,000 and you've only withheld $8,000 from your paychecks, you'll be required to pay an additional interest charge on the $2,000 you still owe. This interest isn't assessed if you pay these taxes by April 15, so even if you don't have your final numbers yet, it can be a good idea to make an estimated tax payment if you suspect you're not getting a refund.
Contact a tax service for more help.