When a significant natural disaster hits – such as a hurricane, earthquake, tornado, flood, wildfire, blizzard, or the like – the IRS will extend upcoming federal tax deadlines for affected taxpayers if a federal disaster is declared. The extended due dates apply to most federal tax returns and payments, including those for income taxes (including estimated tax payments), payroll taxes, and excise taxes. If you’re impacted by a natural disaster, check our IRS Disaster Relief page to see if you qualify for an automatic tax filing or payment extension.
Key Takeaways
- If you need more time to prepare your tax return, you can file Form 4868 electronically or on paper by April 15 (or the next business day if it falls on a weekend or holiday) for an extension to file your taxes by October 15.
- You might need an extension if you don't have all the information you need to prepare your taxes, such as a Schedule K-1 or Form 1099.
- You might need an extension because you’re out of town during tax season or have a major life event, such as losing a loved one, moving, or getting married ahead of the deadline.
- If you wait too long to do your taxes, or bring them to a tax preparer too close to the deadline for them to complete your return on time, you might need to file for an extension.
What is a tax extension?
Since 1955, "Tax Day" in the United States has been April 15, or the next business day if it falls on a weekend or holiday. Despite the fact that taxes are essentially due on the same day every year, many people still find themselves scrambling on the day before to get their records together.
Fortunately, the Internal Revenue Service allows taxpayers to file for a extension to October 15 if they need more time to prepare their tax return. You can obtain an extension for any reason; the IRS grants them automatically as long as you complete the proper form on time. Check your state tax laws; some states accept IRS extensions while others require you to file a separate state extension form.
Who qualifies for a tax extension?
Anyone is eligible to file a tax extension, regardless of your income level or filing status. Additionally, tax extensions aren’t just limited to individual taxpayers—businesses and corporations can file tax extensions, too.
While individual taxpayers will fill out Form 4868 to file a tax extension. Businesses and corporations can use Form 7004. Additionally, alternative forms exist for those with special considerations.
What are the benefits of filing a tax extension?
Filing a tax extension is free, easy and automatic: Just submit Form 4868 electronically or on paper by the filing deadline. TurboTax Easy Extension makes it easy.
Not only will you extend the filing deadline until October 15, you'll relieve the stress that often accompanies trying to pull everything together by tax time. More time and less stress means you'll be able to thoroughly review your return and ensure you're taking advantage of all the tax benefits available to you.
You'll also avoid failure-to-file penalties, which can add up to 25% of the tax due. If you file an extension but miss the extended deadline, you will be subject to this penalty. Keep in mind that filing an extension when you owe taxes only gives you more time to file, not more time to pay—your payment is still due at the tax filing deadline.
An extension will allow you to take advantage of retroactive changes to the tax law that might be made after the filing deadline, without the added time and expense of filing an amendment. Additionally, some tax professionals theorize that filing an extension will decrease your odds of being audited, since IRS auditors have to meet quotas and try to do so early in the year. While the IRS does not disclose its process for selecting returns for audit, the earlier a return is filed, the longer it is in the system and thus subject to a review.
What are some good reasons for filing a tax extension?
Anyone can file a tax extension and every year many people do. The reasons for why you may want to file a tax extension can vary widely depending on your particular circumstances. Perhaps you’re missing some key paperwork that prevents you from filing your taxes or the deadline to file simply snuck up on you.
Below are some of the most common reasons why you may opt to file a tax extension.
Missing or inaccurate information
You can't file an accurate return if you don't have all the information you need, or if what you have is incorrect. It's not unusual for some information returns, such as a Schedule K-1 or Form 1099, to arrive too late to allow you to complete your tax return by the filing deadline. The IRS does impose deadlines for filing information returns, but extensions are frequently granted. These extensions can usually be for 30 days or six months, depending on the return.
Financial institutions and investment companies typically send 1099s to their customers to report interest, dividends, capital gains and sale proceeds. These returns often need correction, especially if they are based on information from multiple investments. "Sometimes if a company knows they are going to be correcting 1099s," notes Martin Cole, a tax educator and former accountant, "they will send a notice to let clients know a change is coming."
TurboTax Tip:
If you can't pay your taxes due, consider paying with a credit card or loan. In many cases, the interest on these accounts will be lower than the combined penalties and fees you'll pay the IRS if you set up an installment plan or get a short extension to pay.
You'll be out of town during tax season
With electronic filing of income tax returns and the ability to obtain electronic copies of many tax forms, taxpayers who are out of town during tax season can often get their return completed and filed by the filing deadline. If you still need some paper information, however, or aren't comfortable with electronic filing, a tax-time vacation may compromise your ability to meet the filing deadline.
"Our practice had a lot of 'snowbird' retired clients who traveled to the southern states for six months of the year," says Cole. Since the clients were expecting refunds, they would file an extension and complete their tax returns when they headed back up north in the spring.
Schedules and timing interfere
"Sometimes," says Cole, "you just run out of time." People get busy and keep telling themselves they'll get to their taxes later, and soon enough it's tax day eve and there's just no way you'll get your return done on time." Tax preparers get busy, too, and many will automatically file for an extension for clients who bring their information in within a week or two of the deadline.
Dealing with a major life event could also cause you to miss the tax deadline. The loss of a loved one, moving, marriage or divorce can take up your time and your energy. Filing an extension will let you deal with your situation when you need to, without having to worry about preparing and filing your tax return.
When should you not file a tax extension?
Many people file for an extension because they owe taxes and are unable to pay them.
"Inability to pay is the worst reason to file an extension," warns Cole. An extension gives you extra time to file, but not extra time to pay. After you file an extension, if you owe taxes when you file your return, you might also have to pay penalties and interest on the tax due.
If you file an extension for other reasons, you need to determine as best you can whether you'll owe money or get a refund; if you expect to owe money, you should pay that amount with your extension. Use a tax estimator like TaxCaster to estimate how much you may or may not owe.
Instead of requesting an extension when you can't pay your tax due, the IRS offers some payment alternatives. You can request a short extension to pay, of 60 to 120 days; you will still pay penalties and interest, but at a lower rate. The IRS also offers installment agreements for taxpayers who can't pay their taxes when they are due. An installment agreement lets you pay a set amount per month until the tax is paid. Finally, the IRS suggests you consider paying your tax due with a credit card or loan. In many cases the interest on these accounts will be lower than the combined penalties and fees you'll pay the IRS.
Will filing a tax extension delay your refund?
Although filing a tax extension can be convenient and provide you with more time to work on your tax return, one of the downsides of an extension is that it will take longer to get your refund.
Since the IRS can’t process and disburse your refund until you’ve submitted your tax return, you’ll have to wait on any refund that may be coming your way if filing an extension.
So, if you expect to receive a refund this year rather than owe taxes, you may want to file as soon as you can to get your refund as quickly as possible.
Can the IRS deny a tax extension?
Nearly every tax extension that’s filed is automatically granted by the IRS. However, it’s possible for your tax extension to be denied if you make errors while filling out Form 4868. For example, things like misspellings and numerical errors can lead to the IRS rejecting your tax extension.
Additionally, providing outdated information that doesn’t match IRS records such as an old address, last name, or business name can result in your tax extension being denied. To help your extension proceed smoothly, it’s important to pay close attention and check for errors when filing your tax extension.
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