A tax extension allows filers to push back their tax deadline by six months (from April 18 to October 17 in 2022). The additional time can help if you're still waiting on tax documents from employers, dealing with incomplete documents, or delayed by any number of reasons.
While this may seem like a simple solution to the impending deadline, there are several factors you need to consider before choosing a tax extension.
A tax extension is a request filed with the Internal Revenue Service (IRS) to allow you to file your tax return at a later date. The traditional tax extension gives filers an additional six months to complete their returns. It's important to note, though, that tax extensions give you an extension on filing your return -- not on paying your taxes. Even if you file for an extension, you need to make an estimated tax payment by April 18 to avoid any potential taxes or fees.
If you're interested in filing for a tax extension, the deadline is April 18. Failure to file a return or an extension by this date will open you up to the potential for late payment penalties. The IRS will not accept any requests after April 18; if you miss the deadline, you should complete your return as soon as possible to minimize the late payment penalties.
Determining whether or not you should file a tax extension depends on your current situation. If you don't have all the necessary documents, physically do not have the time to file, or have another reason delaying you from completing your return, then you may want to request an extension. Keep in mind this only affects the paperwork portion of your return. You are still required to pay the monetary part of your return on time.
"If you have all the documents you need to prepare an accurate return, there's no reason to wait to file," says Nathan Rigney, lead tax analyst at The Tax Institute at H&R Block. "If you're due a refund, there's no benefit in waiting to get your money. And if you're worried you'll owe, you don't have to pay when you file, just by the deadline."
However, Rigney adds that if you have any questions about filing a tax extension, it's beneficial to consult with a tax professional about tax extensions and filing a return.
When it comes to tax extensions in the US, there are three different types of tax extensions:
Filing for a tax extension is a simple process that only takes a few minutes. The standard way to file is to head over to the IRS website and fill out form 4868 (the form includes instructions for filling).
Those in a time crunch or who want to simplify the process can utilize one of many online tax products (like TurboTax, for example) that will file the extension on your behalf. While these are easier to use, they usually carry a small convenience fee. Filing directly with the IRS doesn't cost anything.
[This article was originally published on The Simple Dollar in March, 2020. It was updated in December, 2021.]