Are you going to miss the July 15 deadline? Use IRS Form 4868 to apply for a six-month extension to file IRS Form 1040. This will give you an extension for filing your taxes only; it does not give you an extension on the payment you owe. You will need to file the extension by July 15, 2020, and it will give you until October 15 to file your individual tax return.
There are three ways to request an extension of time to file a U.S. individual income tax return. You can make a payment electronically and use the confirmation number as your proof of an extension, you can file electronically online or through the assistance of a tax professional, or you can file a paper IRS Form 4868 with a payment of the estimated tax amount due.
Although getting an extension only allows you to file six months later not pay later, there are advantages to filing a tax extension. For one thing, you will have additional time to prepare your tax return if you are still waiting for tax documentation to arrive in the mail or if you still need time to organize your paperwork so you can file your 1040 individual tax return.
Also, by filing an extension you prevent yourself from getting a failure-to-file penalty. The penalty for filing late without an extension request is 5% of any tax due for the month or fraction of a month that the tax return is filed late without an extension.
You may save yourself some money too, because by filing an extension you have given yourself more time to work with your tax professional to determine which deductions and tax credits you may qualify for. Essentially, you have given yourself more time to think over the best tax situation.
Finally, everyone rushes to get their tax returns finished by the July deadline, and because of that mistakes are often made out of haste. An extension gives your tax consultant and yourself additional time to go over your tax return to make sure it is accurate and has everything on it that it should.
Question#1: What is a tax extension and how long does it last?
A tax extension is a request made using IRS Form 4868 to the IRS for a six-month extension to file your 1040 tax return. Since the main tax deadline is July 15, 2020, a tax extension will extend your deadline until October 15, 2020.
Note: The normal tax deadline is April 15, but due to the COVID-19 pandemic, the deadline for regular taxpayers has been extended to July 15, 2020. If an extension was made prior to the extended deadline, you have until October 15, 2020, to file your taxes.
Reminder: Just because you file an extension doesn’t mean that you can delay payment. This may seem strange; if you have not filed your tax return, how will you know how much to pay? You need to estimate your payment or you risk getting penalties, fees, and interest.
If you don’t know the exact amount, it’s best to overpay rather than underpay. If you overpay, the IRS will send you a tax refund when you file your tax return.
If you are expecting a refund and you file an extension, you will not get paid until you file your taxes which will be due October 15 with an extension. The sooner you file, the sooner you will receive your refund.
Question#2: When do I need to file my tax extension for 2019?
Tax season for those who have not filed an extension is coming up on July 15, 2020, so if you haven’t done your taxes yet, watch those 2020 tax deadlines, and either file your taxes by that deadline or file an extension.
If you plan to file an extension, you need to do so by July 15, 2020. With an extended deadline, you will have until October 15, 2020, to file your tax return for the 2019 tax year.
As mentioned in question #1, a filing extension is NOT a payment extension. If you owe taxes, they are still due on July 15, 2020.
Question#3: How do I file a tax extension for the 2019 tax year?
To file a tax extension for the tax year 2019, you will need to use IRS Form 4868: Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. If you are working with a tax professional, he or she will be able to help you with filing a tax extension. If you are not working with a tax consultant, but think you may need one, check out this article on why you should be.
There are three ways to file an extension:
- Make a tax payment using the EFT Payment System or other electronic method and receive a confirmation number.
- File electronically with e-File or another software program with your personal computer or through a tax professional.
- Paper file IRS Form 4868.
Making Payments Electronically
You can pay online with a direct transfer from your bank account using Direct Pay or by use of a debit/credit card. You can also pay by phone using one of those methods. When paying this way, be certain you indicate the payment is for a tax extension. Check out this website on IRS payments for more information.
Regardless of which way you pay electronically, you will receive a confirmation number. By doing so, you do not have to file form 4868. Your extension will be automatically processed when you pay part or all estimated income tax electronically.
E-File Using Your Personal Computer or Through a Tax Professional
You can pay electronically through a software package like e-file or through your tax professional. You will need last year’s tax return as you will be asked to provide information from it for taxpayer verification. You can make your payment via one of the electronic methods mentioned above or you can send a check or money order to the correct address for your tax return (see Question #4).
File a Paper IRS Form 4868
If you wish to file a paper copy of IRS Form 4868 instead of doing it electronically, just complete the form and mail it to the correct address (see Question #4).
Question#4: Where do I send my tax extension (IRS Form 4868)?
The addresses to mail Form 4868 with and without payments can be found on the IRS’s “Where to File Addresses for Businesses and Tax Professionals Filing Form 4868” page. You can find which address to use by selecting which state you live in. Select the address that matches how you will be filing: with payment or without.
Note that the columns on the IRS’s address website are on the opposite side on the actual form instructions so make sure you only follow one set of instructions when looking up the address you need.
Question #5: What are the advantages of filing a tax extension?
You may be wondering what advantages there are in filing a tax extension if you still have to make the payments on time, but there are many tax advantages to filing an extension.
To start with, by filing a tax extension you will have more time to finish filling out your tax return. This may be necessary if you are still waiting on certain tax documents to arrive in the mail or if you need additional time to organize your backup material/documentation.
If you were going to file your tax return late, anyway, filing an extension can save you a lot of money. There are two penalties that the IRS imposes on taxpayers. The failure-to-file penalty is 5% on any tax for the month or fraction of a month that a return is filed late without an extension request. By filing an extension, you can avoid this penalty.
Many decisions must be made when preparing your annual tax return. It can take a lot of time to gather the information you need and to get an appointment with a necessary tax consultant if you deem that necessary. You may need professional help to go over any deductions and/or tax credits that you are hoping to take. By filing an extension, you will have the additional time to organize your material and get the help of a tax consultant.
Because everyone is rushing to meet the July 15th deadline, taxpayers and tax preparers are likely to make mistakes because they’re hurried and under a lot of pressure. By filing a tax extension, you and your tax consultant have extra time to go over your tax return and make sure that everything is correct. An extension gives you some breathing room.
When filing an extension, make sure you are doing it right. The last thing you want to happen is a tax audit! Get the help of a tax expert to ensure you get the best tax results. Need help finding the best accountant for you? Check out these tips to find a tax accountant if you don’t already have one.
Not sure how to file an extension, if you should file one, how much you should pay, or what to do before the July 15 deadline? Borshoff Consulting can help you every step of the way. Don’t stress over your taxes; let us do that for you; we can handle it all and we’ll make sure you get the best tax result possible, so contact us today!
You can’t go wrong with Indiana’s top tax expert! Call us to schedule your tax consultation and to learn how to get the best tax advantage for the 2019 tax year.