If you cannot file your tax return on time, you can ask for an extension. There are a myriad of reasons why you may not be able to file; a divorce, a death or illness in the family, or simply being unorganized. The form you need to fill out is IRS Form 4868. Most extensions are accepted – unless you are under a court order to file by a certain date.
The IRS still wants your cash
Extensions only apply to filing your return, if you owe you still need to pay. What you need to do is try your best to determine if you are going to owe money. 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%.
If you can't afford to pay, you can request additional time to pay using the Online Payment Agreement application on www.irs.gov. The extension is usually 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). If you qualify you can request an extension on time to pay and have late penalties waived.
You could also consider trying to get an installment agreement with the IRS so the lump sum isn't due all at once, or submit an Offer in Compromise to lower the amount you pay.
Expats
If you are a US citizen or resident alien abroad you already have an automatic 2 month extension granted to you. 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.
You do have the option of filing for an extension to October 15th 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
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 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, the FBAR is now due on April 15th. If you do not file on time, an automatic 6 month extension will be granted.
Additional extensions
So far we've only touched on extensions for individuals, but there are additional extension forms available for Corporations, Partnerships, and other instances:
- 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 need assistance with your tax prep, tax planning, or a tax debt, contact us to schedule a free consultation.
