If you find yourself struggling to meet the tax filing deadline, don’t worry. You can always file for a tax extension. That means you can kick back and relax until October 16 – the new tax extension deadline.
The tax extension deadline
Taxpayers who request an extension will have until October 16, 2023, to file their 2022 tax return. However, this extension does not extend the payment deadline, so any taxes owed must still be paid on time to avoid late penalties. The extension only provides additional time for the completion of the tax return.
How do I file a tax extension?
There are two ways to request a tax extension – electronically or by mail. It is important to do so before the April 18 deadline to avoid a penalty from the IRS. For those who don’t plan to use tax software or haven’t decided on one, IRS Free File is a good option.
The IRS partners with a nonprofit organization to provide free tax-prep software for those who make less than a certain adjusted gross income. However, anyone can use this service to file an extension online. If using tax software, ensure it supports Form 4868 for tax extensions, which most do. Simply follow the software’s instructions to file electronically and the IRS will send you an electronic confirmation. Alternatively, you can fill out Form 4868 on paper and send it via mail, but make sure to get proof of mailing.
Missing the deadline
If you requested a tax extension but failed to file by the deadline, you may incur additional interest and penalties. An extension provides extra time for filing your return, but not for paying your tax liability.
If you did not pay at least 90% of your tax obligation by the April deadline, you may be subject to a higher late-payment penalty, which is normally 0.5% per month for the outstanding tax, with a maximum of 25%. Furthermore, the IRS may charge a late-filing penalty of 5% per month or partial month for a late return, with a maximum of 25% of the total owed.
Does it apply to you?
By submitting IRS Form 4868 by the original tax deadline, you are granted an extension until October 17, 2023, to file your return. However, you have to pay at least 90% of your tax liability by the original deadline to avoid interest and penalties from the IRS.
If you didn’t file Form 4868 by April 18, your taxes are overdue and the IRS may charge you interest and penalties.
Overseas taxpayers and military members
Individuals who meet certain criteria may not need to apply for tax extensions as they are automatically granted extra time. This includes U.S. citizens or residents who lived and worked abroad on the tax-filing deadline, who receive an automatic two-month extension.
Natural disaster victims may also be granted additional time, with the length varying based on the disaster. Additionally, members of the military may be eligible for extra time, based on their location and activities.
Bottom line
Getting a tax extension means you have until October 16, 2023, to turn in your tax return. But, it doesn’t give you more time to pay – it just gives you more time to file. If you can’t submit your return by April 18, try your best to estimate your tax bill and pay as much as you can by that date. If you owe anything after the deadline, it could result in interest and a late payment penalty, even if you have an extension. On the bright side, if you pay at least 90% of your tax bill by the April 18 deadline, you can avoid the penalty.
If you’re not sure how much you owe, a tax professional can help you estimate it or you can use line 13 of Form 1040-ES to do it yourself. If you end up paying more than you owe, you’ll get a refund. But if you pay less, you’ll owe more. Not paying your taxes won’t impact your credit directly, but you will face fees from the IRS. The penalty is 0.5% of your unpaid taxes each month, with a cap of 25% in fees. If you need help paying, you can enroll in an IRS payment plan.
