This year's tax deadline, also known as Tax Day, is April 18. That's when we all celebrate the end of another tax season. It's not much time if you have a complicated tax situation or are missing some important documents. If you've already filed your 2016 tax return, congratulations!
If you haven't filed yet, you need to hurry up. Or, you can punt. You can alleviate the stress and get the extra time you need by filing an IRS tax extension.
What is a Tax Extension?
If you can't complete your return by the regular tax deadline, an extension gives you extra time to file. You have until April 18 to request an IRS extension, which gives you an automatic six-month grace period and, more importantly, helps you avoid a late filing penalty. With an extension, you'll have until October 16, 2017, to file your 2016 tax return.
If You Think You'll Owe Money
It's very important to understand that filing an extension does NOT give you extra time to pay taxes you owe. You still need to estimate your tax liability and include that payment with IRS Form 4868. Any money you may owe will still be due by April 18.
If your payment is late, you may face interest and a late payment penalty up to 25% of your total tax liability.
If you can't afford to pay the full amount due, installment plans and other payment options are available from the IRS. Also, filing an extension does NOT affect the tax deadline for your state return, which may still be due by April 18. Make sure to check with your state because deadlines can be different from the federal one. For example, Virginia's deadline is May 1st.
If You're Expecting a Refund
You're in great shape because you don't need to file a tax extension at all! The IRS gives you three years to file your return and claim your refund money. But it's your money after all, so don't wait too long to get it back.
So, How Do You File for an Extension?
By April 18, complete and submit Form 4868, Application for Automatic Extension of Time to File U.S. Individual Tax Return, to the IRS. At the bottom of page 1, fill in your identification information. If you think you may owe money, use lines 4-to-6 to estimate your total tax liability and subtract how much you already paid
If you're not sure what you want to do or you need help estimating your tax liability, a professional tax preparer can be a big help. But at least it's nice to know you have options, which should help keep your stress level down this tax season.