It’s not usual to feel overwhelmed at tax time; you look at the calendar and suddenly realize, “Oh my gosh! It’s April 12th! I should really file my tax return.” Getting taxes done is often a project that sits on the back burner…in reality, who's excited about doing their taxes? The good news is that you do have the option of asking the IRS for an extension to file your tax return.
Federal tax return extension requests for individuals
To request an extension, fill out Form 4868 and submit it by the tax return due date; for 2017 it is April 18th. Most extension requests are accepted by the IRS. A couple of reasons they may not be are if you want the IRS to figure your tax, or if you are under a court order to file by the regular due date. If your request is accepted then you will be granted an extra 6 months of time. The exceptions to the 6 month rule are if you are:
- Serving in a combat zone or qualified hazardous duty area
- Out of the country when your 6 month extension expires
- Living outside of the US (more on this below)
This extension applies only to your federal taxes; you’ll need to check with your state laws as some will accept IRS extensions while others require you to file a separate state form.
The money, on the other hand…
It is important you know that this extension applies only to filing your return, not paying! Your payment is still due on the April deadline. This means you’ll need to try your best to determine if you are going to owe money or if you’d be getting a refund.
The penalties for not paying by the original tax filing deadline are ½ percent each month on the amount of tax you still owe after the deadline. If you fail to file a return by the extension date, the penalty increases to 5% for each month, for a maximum penalty of 25%.
What if I really can’t afford to pay?
Some people decide that they just won't file…this is not a good idea. You can hide from the IRS until you can't – they're very good at hide and seek. But, there are options. You can request additional time to pay using the Online Payment Agreement application on www.irs.gov. This extension is generally 60 to 120 days; you’ll still owe interest and penalties but at a lower rate. Another option is requesting an extension of time to pay on Form 1127 (Application for Extension of Time for Payment of Tax Due to Undue Hardship). Qualifying individuals may request an extension on time to pay and have late penalties waived as part of the IRS Fresh Start initiative.
You could consider negotiating with the IRS and hammering out an installment agreement with them so the lump sum is not due all at once.
Expats tax filing extensions
US citizens and resident aliens abroad already have an automatic 2 month extension granted to them as their returns can be much more complicated and time consuming to get done. Penalties for paying any late tax are assessed from the 2-month extended due date of the payment. However, even if you are allowed an extension, you will have to pay interest on any tax not paid by the regular due date of your return.
If you’re unable to file your return by the automatic 2 month extension date, you can request an addition extension to October 15th by filing Form 4868 – Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, before the automatic 2 month extension date.
These two month and four month extensions above do not apply to offshore trusts. If you file Form 3520-A , it is due on March 15 and can be extended until September 15 using IRS Form 7004.
Form 2350 is for very specific issues, not for all Foreign Earned Income Exclusion (FIFE) filers – only if you don’t qualify for the FEIE on April 18th and need an extension in order to qualify.
In addition to this 6-month extension, taxpayers who are out of the country (as defined in the Form 4868 instructions) can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address:
Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215
You will not receive any notification from the IRS unless your request is denied for being untimely.
The discretionary 2-month additional extension is not available to taxpayers who have an approved extension of time to file on Form 2350 (for U.S. citizens and resident aliens abroad who expect to qualify for special tax treatment).
As of 2017, your FBAR is now due on April 15th (or, the 18th for this particular filing season). If you do not file on time, you are automatically granted a 6 month extension.
But wait! There’s more
The extensions we are referencing in this article refer to individuals, but you can reference www.irs.gov for other extension forms as well, such as Corporations and Partnerships:
- Form 2350 Application for Extension of Time to File U.S. Income Tax Return (For U.S. Citizens and Resident Aliens Abroad Who Expect To Qualify for Special Tax Treatment)
- Form 4768 Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-
- Skipping Transfer) Taxes
- Form 5558 Application for Extension of Time to File Certain Employee Plan Returns
- Form 8809 Application for Extension of Time to File Information Returns
- Form 8868, Application for Extension of Time To File an Exempt Organization Return.
- Form 8892, Application for Automatic Extension of Time to File Form 709 and/or Payment of Gift/Generation-Skipping Transfer Tax
- Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns
- Form 1138, Extension of Time for Payment of Taxes by a Corporation Expecting a Net Operating Loss Carryback
If you're concerned about unfiled returns, or a tax debt that feels overwhelming, contact us. We can help. Call us at 888-727-8796 or email firstname.lastname@example.org.