Here’s how to file a free federal tax extension and avoid penalties

Tax procrastination happens. But if you’re still missing key forms or feeling overwhelmed, you can buy more time by filing a free tax extension.

Nearly one-third of Americans procrastinate with their taxes, the top reasons being complexity and stress, according to a recent survey from IPX1031.

You can avoid a late-filing penalty with an extension by the federal deadline on April 18. But you still must pay your balance by the due date to avoid a late payment penalty and interest. You may also need a separate state income tax extension, depending on where you live.

More from Smart Tax Planning:

Here’s a look at more tax-planning news.

By filing for an extension, you’ll have an extra six months to submit your taxes, which bumps the deadline to Oct. 16. “All it does is help you,” said Bill Smith, national director of tax technical services at CBIZ MHM’s national tax office. 

However, a delayed filing means you’ll wait longer for a refund, he said. As of March 17, the average refund was $2,933, according to the IRS.

While several disaster areas qualify for automatic extended deadlines this season, Karla Dennis, an enrolled agent and founder of Karla Dennis and Associates, suggests affected taxpayers also file for an extension by April 18.

“It was the same in 2020 when we went through Covid,” she said. “Unfortunately, IRS did not retool its system and a lot of taxpayers still received letters.”

How to file a federal tax extension

If you can’t make the April 18 tax deadline, there are a few ways to file for a federal extension, with or without a tax professional.

One option is to file Form 4868 online via IRS Free File, which offers free guided tax prep software. “Anyone can go on that site and file for the extension,” regardless of income, said certified financial planner and enrolled agent John Loyd, owner at The Wealth Planner in Fort Worth, Texas.

FDIC insurance: Safeguarding your cash

Another choice is to make an electronic payment and select “extension” as the reason, which provides an automatic six-month extension without filing Form 4868, according to the IRS.

However, Loyd uses the first option to minimize the chance of mistakes or confusion. “If you file Form 4868, it’s very clear that you know exactly what you’re doing,” he added.

Dennis also suggests filing Form 4868 over the payment option, especially if clients later need proof that they did file an extension. “I have never been able to defend a late-filed return with someone saying they’ve gone online to pay,” she said.

Again, you’ll need to take separate steps to request more time to file your state tax returns, depending on where you live.

Source link

Products You May Like

Leave a Reply

Your email address will not be published. Required fields are marked *

Get The Best Financial Tips
Straight to your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Slot Anti Rungkad