If you’re racing to make the April 18 tax deadline, but can’t get to them on time, relax! Getting an extension to file your taxes is pretty simple. I’ve actually done it twice myself. On this episode of The Payoff, I’ll tell you how to file for an individual extension.
Hurdle #1: You have to file for both a federal and state extension.
To get the federal extension, go to the IRS’ site and find form 4868 which is the application for an automatic extension. If you send this form in by April 18, it buys you 6 months of time and your new deadline will be Oct. 17, 2017. You generally can’t get more time than that.
The good news is you don’t need a good excuse to get the extension. The bad news is you still have to pay what you owe in taxes on time. The first time I filed for an extension, I did not realize this and had to shell out hundreds of dollars in penalties and interest. Learn from my mistake.
The easiest way to get an extension is to estimate what you owe in taxes and pay electronically on the IRS payment site. As you’re doing that, mark it as an extension payment and you’ll get the extension automatically without having to file form 4868 separately.
Hurdle #2: Know what you owe.
How can you figure out how much to pay if you haven’t filed your taxes yet? If you’re using tax software, try to get as far as you can and make an educated guess. The IRS also has a tax table that can help, too. It’s OK if you overpay because that money will be refunded to you once you file your return.
If you’re not using tax software to e-file, you can also estimate your payments using the tax tables for 2016 provided for by the IRS. Kathy Eng, a member of the New York State Society of CPAs, recommends that you pay at least 90% of your balance due by April 18. It’s OK if you overpay because, again, that money will be refunded to you after you file your return. But if you don’t have the money to pay what you owe, Eng recommends you file an extension and pay whatever little bit you can until the new Oct. 17 deadline.
If you’re not ready to make a payment, just send in form 4868 on its own. If you’re doing it by paper, you can mail it in to the corresponding address listed on page 4. But if you’re filing electronically anyway, just use your tax software.
Remember, the extension is only for filing the return – no one gets to postpone payment without paying interest. And most people will have to pay the late payment penalties unless you have a good excuse. The most reasonable explanations the IRS accepts are health-related and you have to put it all in writing.
Hurdle #3: The state extension.
It depends what state you live in, but many states will just give you more time once you’ve filed for the federal extension. In case you’re in one of the states that requires a separate form, check your state’s rules.
And that’s it! You officially have more time. Now just do your taxes to cross the finish line.
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