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Filing for an Extension – What to Know

As the tax deadline approaches, many taxpayers have still yet to file their taxes!  Many of those who still haven’t filed may be beginning to panic, but don’t worry, there is something you can do to give yourself some more time!  If you are looking for this additional time, filing an extension is likely the right move for you! By submitting Form 4868 before the last day of the deadline, you will be giving yourself several additional months to prepare your return, no matter why you need more time!

What is a Tax Extension

It is important to make the distinction that a tax extension does not give you more time to pay taxes, rather to file the actual paperwork.  Your tax payment will still be due on the tax deadline (April 18th, 2022 this year).  This means you will fall into one of two categories:

 

Getting a Refund:

If you know you are owed a tax refund, you won’t need to worry about paying while filing an extension or taxes.  The earlier you file your return, the earlier you’ll receive the refund.

 

Think You’ll Owe:

If you believe you will owe on taxes, you should estimate your tax liability and pay the amount due when you file Form 4868.

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Will I be Penalized for Filing an Extension?

Filing an extension is not a bad thing, and is a pretty common practice among taxpayers.  This being said, there is no penalty for filing an extension, however, not paying on time, or enough, or failing to file altogether, may cost you.

  • If you underpay the full amount, the IRS will charge you interest on the unpaid balance, until you pay the full amount;
  • If you don’t pay at least 90% of the amount owed, you may be subject to a late payment penalty. The penalty is typically half of 1% of the amount owed for each month, up to a maximum of 25%.
  • If you do not file a return of Form 4868 to extend, you’ll be subject to a late filing penalty. The penalty is usually 5% of the amount you owe for each month, up to a maximum of 25%.

 

After filing an extension, you will have until October 15th to gather your documents and finish your filing.  Once you complete the return, you should include the amount you already paid in the payments section of Form 1040.

Looking for help through this process? Give us a call..

 
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