The deadline for filing a tax return this year is Monday, April 15th. That’s just seven days away! I know there are some of us who filed our tax returns as soon as the IRS began accepting tax returns. Others of us may be too busy writing (trying to make enough money to pay the tax bill?) to get those tax returns done before the tax deadline. Don't fret; you may be able to get a few months breather.
The IRS allows us (U.S. taxpayers) to file for an automatic extension for the tax return. Once you apply for the extension, you have six more months, until October 15, to file your tax return. You may choose this option if you don’t have enough time to prepare your taxes right now, you need time to get more paperwork, or you don’t want to deal with the rush and crunch time that tax offices and accountants will be dealing with this week.
How to Request a Tax Extension
You can file for a tax extension using IRS Form 4868 (PDF). Most efile software, like TurboTax which I’ve used for years, will let you file an extension online for free. You can also print the form, fill it out, and mail it to the IRS by April 15. If you choose to file for an extension online, you need to do it by midnight on April 15. Or do it now to avoid the rush.
Extension to File, but Not to Pay
Note that the tax extension does not extend the time to pay any taxes you owe for 2012. The application for automatic extension will ask for your estimated tax liability for 2012. You may have to do a rough pass on your tax return to figure out that number, but if you paid all your estimated taxes last year, you may not owe anything.
The IRS doesn’t require you to pay your 2012 tax liability to file for an extension. However, you’ll owe penalties and interest on late taxes that aren't paid by April 15. You can always pay the estimated tax liability, then get any overpayment as a refund when you file your tax return later this year.
Don’t forget that your estimated tax payment for January through March of this year is also due on April 15.
If you don’t think you can file your taxes by April 15, definitely file for an extension. The penalty for failing to file your taxes is higher than the penalty for not paying your taxes.
When You Can't Pay
If you’re avoiding filing because you can’t afford to pay what you owe, you have other options like making more deductions, entering an installment agreement with the IRS, paying by credit card (not generally the best idea), or paying within 120 days of filing.
Don't Dodge the IRS
The IRS will eventually figure out when you haven’t filed your tax return or paid your taxes owed and then they’ll get more aggressive with collections. For example, if you don’t complete a tax return, they’ll do one for you using the information they have on file and likely not including your available deductions. Minimize your interest and penalties by being proactive on your taxes.