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What Are Tax Extensions?

Updated for Tax Year 2014


OVERVIEW

The IRS allows individuals, businesses and estates to file a tax return after the deadline by obtaining an extension.


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The IRS allows individuals, businesses and estates to file a tax return after the deadline by obtaining an extension. Successfully filing for an extension means no late-filing penalty will be assessed unless the return is not filed by the extended deadline.

However, this does not extend the deadline to pay taxes. If you fail to pay your tax bill by the original deadline, you may be subject to penalties and interest.

Filing an extension on a personal tax return

If you need more time to file your personal income tax return, you can complete Form 4868 for an additional six months. This basic two-part form simply identifies you and allows you to make an estimated tax payment. You can generally recover interest on any amount you overpay, but you will be liable for interest on any amount you underpay. To obtain the extension, you must file Form 4868 by the tax return deadline, which is generally April 15 of each year.

TurboTax Easy Extension allows  you to file your extension online, and can help you estimate how much you owe in taxes.

Extensions for U.S. expatriates

U.S. taxpayers can obtain a two-month extension when they are outside the U.S. on the tax filing deadline. To qualify, your main place of business must normally be outside the U.S. or you must be on active duty in the military.

For this extension, simply file your return no more than two months after the original due date and attach a statement explaining why you qualify for the two-month extension. Unlike the six-month extension available to taxpayers living within the U.S., this two-month extension allows you avoid late-payment penalties during the two months. However, you will still incur interest charges on the amount of tax you fail to pay by the April filing deadline.

Estate tax return extension

The estate tax return is ordinarily due within nine months of the decedent's death. The executor of the estate can file Form 4768 to receive an automatic six-month extension of time to file the estate tax return on Form 706.

An executor who is out of the country can file for an additional six-month extension for a total of 12 months. However, this second extension is not automatic and the application must be filed with the IRS prior to the termination of the first extension so that it has sufficient time to evaluate the application.

Business tax return extensions

A partnership can obtain an automatic five-month extension of time for filing its income tax return on Form 1065, and a corporation that files an income tax return on Form 1120 can obtain a six-month extension provided a Form 7004 is filed with the IRS by the original filing deadline. However, if you are a sole proprietor who prepares a Schedule C to report taxable business earnings, you can obtain an extension of time using Form 4868.

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

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