An extension is simply a way to tell the IRS that you plan on filing your taxes later than April 15th. When you apply for an extension using Form 4868, once qualified, the IRS will accept your application and automatically extend your deadline from April 15th until October 15th. This is easy and straightforward; however, many individuals continue to think that additional time given in filing an extension means additional time for them to pay any taxes due. The answer here is simply, “no; your documents have obtained an extension, but your payment has not.”
So when should you bother with extensions? In most cases, extensions are meant for taxpayers who have almost completed everything but still have some information outstanding. For example, your employer may not have sent you a W-2 yet and you need this document to complete your return. Also, if you have put all of your receipts in your shoebox and now need to go through them all before filing your taxes, you can file for an extension. Similarly, if it’s April 13 and you are feeling overwhelmed and ready to panic, then you should file for an extension.
However, do not use an extension as an excuse to put off your taxes for several months after you receive it. If you are going to receive a tax refund, this is your money that the IRS will hold on to until you file for your refund. On the other hand, if you owe taxes when you file your return, the extension will not protect you from penalties if you do not pay your taxes by April 15.
Two Distinct Sets of Filing Methods for Individuals Who File Their Taxes Differently
Filing for an extension is less complicated for those who typically receive a tax refund than for those who typically do not owe any taxes or who have to make an estimated tax payment before filing for an extension. If you have not had any substantial changes in your finances since filing last year and usually receive a refund for the amount you were expecting, you can file for your extension online at no cost using a web-based provider such as FreeTaxUSA.
To use this online method to file for an extension, follow these simple steps:
- Go to the FreeTaxUSA homepage
- Click on the Tax Extensions link
- Create an account with the site
- Enter your name and address, as well as your Social Security number
- Enter your expected refund
- Choose your filing status
- Click submit
Now that your extension has been successfully filed, you do not need to worry about mailing any forms or paperwork, nor do you need to take the chance that your forms will end up getting lost because you put the wrong address on the envelope. If you file jointly with your spouse, their information will need to be added to your account as well; however, the filing process will continue to be easy.
Method of Payment to IRS Via Direct Deposit (I probably owe the IRS)
If you expect to owe money to the IRS, the process of filing an extension is even simpler for you. Visit the IRS website, select “Pay”, choose “Direct Pay using my bank account”, select “Extension” as the reason for the payment, and make your payment for whatever you believe you owe. You don’t have to file a separate Form 4868 if you have made the payment as an extension. The IRS states on its website that making a payment for “extension” constitutes an application for an extension.
As an extra precaution, it’s a good idea to make your payment slightly larger than what you think you owe. This will allow you to receive a small refund rather than having to pay additional penalties for underpayment later on.
Mailing a Form is a Learning Experience
You can fill out Form 4868 by printing the form off the computer, filling out the boxes freehand, and triple checking the instructions then sending the completed form via regular postal mail. You could place your entire tax year in the hands of the postal service or make a minor mistake in reading a line or failing to include a number or wrap the paper around in an awkward way and hope the envelope didn’t disappear into a black hole. On the other hand, filing online through an electronic service is no longer a hassle so you don’t have the stress of wondering if the envelope will ever show up at the IRS.
Do Not File a Tax Extension After April 15th
If you have not filed your tax return by April 15th, filing a tax extension will no longer assist you. If you miss your tax filing deadline of April 15th your only option now is to file your tax return as soon as you can. The IRS has already started the “penalty period” and the longer you postpone filing your tax return the more penalties the IRS will impose. Extensions should be used as a way of avoiding penalties, not as an excuse for delaying payments.
Which method should I choose?
- If you’re anticipating a refund, use an e-file extension service for free.
- If you’re expecting to owe money, pay the IRS directly with Direct Pay and choose Extension.
- If you’d like to maintain some level of sanity, don’t send in your forms via U.S. Mail.
- If you’re thinking about postponing your tax payments, don’t think about filing an extension as an excuse to delay.
Whichever route you take, your goal is to file your return and pay your taxes while avoiding penalties that could take the money out of your pocket.
