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Yes, we all know we are required to file a tax return by the due date each year, which is usually April 15. For tax year 2017, the deadline is April 17, 2018.
If you don’t file your federal income tax, the IRS may file a substitute return in your behalf, which will not include any credits or deductions you may be entitled to.
If you need more time to prepare your federal tax return, for various reasons, then you can apply for an extension of time to file. Please be aware that an extension of time to file your return does not grant you any extension of time to pay your taxes.
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If you file for an extension this year, your return is due October 15, 2018. This newsletter provides some information on applying for an extension of time to file.
E-file Your Extension Form
Individual tax filers can e-file their extension form for free using Free File which allows taxpayers to prepare and e-file their taxes for free. It can also be used to e-file a free extension to file request.
Midnight April 18 is the deadline for receipt of an e-filed extension request. Free File is accessible for tax return preparation and e-filing through Oct. 17. It is only available through IRS.gov.
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- Extension Forms by Filing Status: Individuals
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| Form 4868, Application for Automatic Extension of Time. The deadline for mailing the form to the IRS is April 18. Form 4868 is available on IRS.gov/forms |
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| Special rules may apply if you are: |
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Serving in a combat zone or a qualified hazardous duty area,
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Living outside the United States. |
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The IRS grants taxpayers an automatic 6-month extension of time to file. You can also get an extension by paying all or part of your estimated income tax due and indicate that the payment is for an extension using Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or a credit or debit card.
This way you won’t have to file a separate extension form and you will receive a confirmation number for your records.
The extension request must contain an explanation as to why the additional time is needed and what your company's strategy will be during the extension period to become compliant.
If there’s a balance due on your tax return, the failure to pay penalty is 0.5% per month plus a monthly interest charge from the day the return was due.
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There is also a failure to file penalty, which is calculated at 5% of the tax for each month the tax is late unless the return is more than 60 days past due, in which case the penalty is $135 or 100% of the tax owed, whichever is less.
Not to mention (which is exactly what we’re doing) that failure to file a return can be interpreted by the IRS as tax evasion.
Filing an extension of time is really easy to do and it doesn’t raise red flags with the IRS or automatically put you on their “to be audited” list.
If you requested an extension of time to file your income tax return by the tax due date and paid at least 90 percent of the taxes you owe, you may not face a failure-to-pay penalty. However, you must pay the remaining balance by the extended due date. You will owe interest on any taxes you pay after the April 18 due date.
If you have received a notice, make sure to send your past due return to the location indicated on the notice you received.
The extension will give you extra time to prepare an accurate return, find more deductions, get a second opinion, or decide whether to carry back or carry forward your losses if a business owner.
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Of course, let us not forget you may need to pay state taxes too.
Some states automatically grant an extension to file once you apply for the federal extension, other states have their own forms you need to file to get an extension, but they all expect you to pay due taxes on time.
District of Columbia, for instance, requires you to file Form FR-127 to receive an extension of time and you are expected to include payment with the FR-127 voucher. |
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In Virginia Form 760E is used as extension and payment voucher as well.
In Maryland you are not required to file a state extension if you filed the federal one, but you should use Form 502E to pay any tentative tax due in order to avoid any late-payment penalty and interest on tax not paid on time. |
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| Business and Corporations |
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Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. This form consists of 3 main sections and can be used to apply for a 5- or 6-month business extension. While Part 3 is mandatory for all filers, you must choose between filling out Part 1 or Part 2 depending on the type of business return you’re requesting the extension for.
Form 1138, Extension of Time for Payment of Taxes by a Corporation Expecting a Net Operating Loss Carryback. A corporation that expects a net operating loss (NOL) in the current tax year can file Form 1138 to extend the time for payment of tax for the immediately preceding tax year. This includes extending the time for payment of a tax deficiency. The payment of tax that can be postponed cannot exceed the expected overpayment from the carryback of the NOL. |
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| Other Forms |
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Form 2350, Application for Extension of Time to File U.S. Income Tax Return (For U.S. Citizens and Resident Aliens Abroad Who Expect To Qualify for Special Tax Treatment). U.S. citizens and resident aliens abroad file this form 2350 to ask for an extension of time to file their tax return only if they expect to file Form 2555 or 2555-EZ and need the time to meet either the bona fide residence test or the physical presence test to qualify for the foreign earned income exclusion and/or the foreign housing exclusion or deduction.
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Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes. Estates must file IRS Form 4768 to ask for an extension of time to file Form 706 -- the United States Estate (and Generation-Skipping Transfer) Tax Return. It can take some estates a little more time just to determine whether Form 706 is required.
Form 5558, Application for Extension of Time to File Certain Employee Plan Returns. You can use the IRS Form 5558 to apply for a one time extension of time to file the Form 5500 series.
Form 8809, Application for Extension of Time to File Information Returns. Use this form to request an extension of time to file forms: W-2, W-2G, 1042-S, 1094-C, 1095, 1097, 1098, 1099, 3921, 3922, 5498, and8027.
Form 8868, Application for Extension of Time To File an Exempt Organization Return.
Form 8892, Application for Automatic Extension of Time to File Form 709 and/or Payment of Gift/Generation-Skipping Transfer Tax. Use this form to: request an automatic 6-month extension of time to file Form 709, when you are not applying for an extension of time to file your individual income tax return using Form 4868, and to make a payment of gift tax when you are applying for an extension of time to file Form 709 (including payment of any generation-skipping transfer (GST) tax from Form 709).
It looks complicated and it actually is, this is one of the many reasons we always urge you to use the specialized skills of a tax professional to help you navigate through all the meanders of the IRS tax code. |
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