When Time Flies -- When And How To File For An Income Tax Extension

While most people are able to successfully file their income taxes before the April deadline each year, there can be a variety of reasons why you find yourself unable to do so. This can be a really stressful realization. Will you be penalized? Will you owe money? Do you have any options other than just being late and hoping for the best?

The answer to that last question should reassure you. You do, indeed, have options. The most common way to handle this is to file an income tax extension by April 15.

When to File an Extension

A tax extension is an extension of time to file, which you may need for several reasons. These may include:

  • Failure to receive forms on time (including Forms W-2 or 1099)
  • Waiting to receive special forms, such as Schedule K-1 or certain Forms 1099
  • Being away from home (either inside or outside the U.S.) and unable to complete your paperwork
  • Seeking professional tax help for an unusual situation

The tax extension automatically gives you 6 extra months, expiring in October.

How to File an Extension

Filing the extension itself is not hard. You will need to complete and send in (either on paper or electronically) Form 4868. This form is very simple, and you may choose to send in a payment of tax due with the form (or you may choose not to).

The hard part for most taxpayers, though, is how to estimate their income tax due. Because the extension simply gives you extra time to file without an automatic penalty, you will still be expected to have paid your tax due by the normal April deadline. This will require doing an estimation of your tax liability and paying anything still outstanding in order to avoid interest and other penalties.

If you're unable to estimate – with reasonable certainty – what your taxes will look like when completed, you may need to work with a professional tax preparer or accountant, like Capital Accounting And Tax Service Inc. If this is not possible, some taxpayers opt to overpay their liability before the April 15 deadline to avoid any nonpayment penalties.

Filing a tax extension is a simple way to reduce the stress of an approaching filing deadline. While it may not solve your problems if you can't pay the tax due, it can help keep you in good standing and buy some time to figure out your next step. And that can be a tremendous help in difficult times.