With tax day looming right over the horizon, specifically tomorrow, you may have just realized that you are not going to be able to file your taxes on time this year. Don't panic, or break out in a cold sweat, because there is something you can do to give yourself some an extra six months of breathing room to organize your paperwork.

Tax extensions are relatively straight forward to understand, easy to apply for, and are automatically granted by the IRS. Especially for Millennials, who might be engaged in a lot of freelance work, this opportunity to get some extra breathing room, to talk to my fellow CPAs and certified tax professionals, is something to be used if need be.

Also, it is important to remember that these tax extensions are only for federal income taxes, and you should consult a CPA, tax professional, and your states website to see what the process is for obtaining an extension for state taxes.

For the federal extension, there are some details you have to know, however, and it's important to get these details right so that you get the time you need.

Let's take a look at some of the critical issues for tax extensions.

1. What is the deadline to request an extension?

The deadline for requesting an extension on your income taxes is tax day, which this year is April 18th. There is no penalty for requesting an extension. While it is true that this is an automatically granted extension, if you have not requested an extension by tax day your return is considered late, and you might end up paying fees and interest on the taxes you owe.

2. How do I file for a tax extension?

You can file for a tax extension by filling out form 4868, available for free on the IRS website. Additionally, if you are using a tax preparation service, they can either fill the form out for you, or work with you to get the form completed. The form is short, simple to fill out, and provides you an additional six months, until October 18th, to get your tax paperwork ready for filing.

3. So I don't pay taxes until October? Great!

Well actually your taxes, or at least a good faith estimate of what you will owe, are still due by April 18th. This is something that I have seen a lot of people get tripped up with - just because you have extra time to file your tax return does not mean you have any extra time to pay. Spend a few minutes working up a solid estimate of what your taxes will be, and make sure to enclose that payment when you file for an extension.

4. Do not forget!

As a CPA, I cannot stress this last point enough, and that is you have to do something around tax time. The combination of fees and interest can really add up quickly if you do not either file your tax return with payment, or request an extension while mailing in an estimated payment. The IRS will work with you, but you have to make sure you check the boxes on your end.

Tax time is not usually a fun time of year, but the good news is that even if you do not have everything perfectly organized and ready to go, there are tools to help give you some much needed breathing room. Requesting a tax extension is penalty free, costs nothing, and gives you some peace of mind to get your documents put together. Just do not forget to enclose an estimated payment, and you will be able to rest easier knowing you are in good shape.