Understanding When and How to File for a Tax Extension
The tax filing deadline is or 2022 Tax Season is April 18th, but sometimes you may need additional time to gather all the documents or information necessary to complete your return. In this case, you can consider filing an IRS extension. An extension prevents late-filing penalties from being assessed as long as the return is filed by the extended deadline and any taxes due are paid on time. Here’s what else you need to know about filing for an extension.
Form 4868 - What You Need To Know
Form 4868 is the form used by individuals to request additional time for filing their personal income tax return. This form simply identifies you and allows you to make an estimated tax payment if needed. You can also file Form 4868 electronically, which will allow you to receive an instant confirmation that your application has been received and accepted by the IRS. It's also important to note that filing Form 4868 does not extend the deadline to pay taxes—you must still pay any taxes due by April 18th or be subject to interest and penalties on any amount underpaid.
Understanding Interest & Penalties
If any taxes due are not paid by April 18th, interest will be charged from April 19th until the balance is paid in full. If you owe more than $1,000 in total federal taxes after subtracting all withholding and credits, then a late payment penalty of 0.5 percent per month will be imposed on unpaid balances until it reaches 25 percent of the balance due. In addition, if your return was filed more than 60 days late then a minimum late-filing penalty of $210 (or 100% of unpaid taxes) may apply—regardless of whether or not an extension was granted.
Filing for an extension may give you extra time to file your return but it does not extend the deadline to pay taxes owed. Therefore, it’s important that you understand how interest and penalties work should you fail to pay your entire tax bill on time. Additionally, while filing Form 4868 prevents late-filing penalties from being assessed as long as the return is filed within 6 months from its original due date (which includes extensions), other penalties may still apply if your return is filed more than 60 days after its original due date—so it's important that you file as soon as possible even if it means using an estimate instead of exact amounts for certain fields on your tax return. The bottom line? Filing for an extension gives taxpayers much needed breathing room but understanding when and how extensions works helps avoid costly penalties down the road!