There are several reasons why a taxpayer may need to request an extension of time to file their income tax return. In some cases, a filer may not have all of the information necessary to file a return. An employer may not send a W-2 form or a pension or investment firm may forget to generate a 1099 form that must be reported on the 1040. Those who are involved with complex business deals or own their own corporations may need to wait until later in the year in order to get certain financial information from those entities, because many times those entities will file their tax returns in the fall.
Requesting an Extension
The process for requesting an extension on your taxes is very simple. All that is necessary is IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. This form is available at many public libraries and can also be downloaded from the IRS website at www.irs.gov. Type “form 4868” into the search bar and a link for the PDF file of this form will appear. You can either fill out the form on your computer and then print it off or complete it manually. The form itself is very short, only requiring the taxpayer’s name, address, Social Security number and estimated tax liability. No explanation of why the extension is being requested is required. Taxpayers who submit this form are automatically given an additional 6 months to file their returns, with a deadline of October 15. This form used to only grant a 4 month extension, and then another form was required to get an additional 2 months of time. But the IRS eliminated this form a few years ago and now grants an automatic 6 month extension to everyone.
For Members of the Military
Any member of the U.S. military who is deployed overseas during tax season is automatically granted a 6 month extension from the time that they return stateside. For example, if someone in the army returns from Afghanistan on June 20, then they have until December 20 to file their return. However, service members who will be getting a refund may be wise to give someone at home power of attorney to file their returns for them, particularly if they would otherwise have to wait several more months to get their money. This can be done by completing IRS Form 2848 for power of attorney. The representative can then get the service member’s tax information and forms and file a return on their behalf.
Filing vs. Payment
Remember that getting an extension to file does not equal getting an extension to pay the tax you owe. Interest and penalties will accrue on any unpaid balance that you owe the IRS. For example, if you end up owing $2,500 for the year, then you will pay interest plus a penalty of one-half of one percent per month on the outstanding balance, up to 25% of the balance due. For more information on filing an extension, visit the IRS website at www.irs.gov or consult your tax or financial advisor.