If you can’t make the April 15 federal tax deadline, you should request an extension before the date passes. Otherwise, you could get hit with expensive penalties.
“One important cautionary note for taxpayers is to always get your return filed on time by the original due date of April 15 or the extended date of Oct. 15, 2024, even if you must amend the amounts later,” says Bret Scholl, a certified public accountant in central California. There’s no penalty if you miss the deadline and you don’t owe money – but you’ll have to wait longer to receive your refund.
But if you do owe money and miss the deadline, you could get hit with two penalties: a late-filing penalty of up to 5% of the unpaid balance each month, up to a maximum of 25%, and a monthly penalty for failure to pay on time, which is 0.5% of the unpaid taxes. Note that the late filing penalty is 10 times the penalty for failing to pay on time.
“Even if a taxpayer cannot pay, always file a return on time,” Scholl says. “A payment plan can always be worked out, and the penalties may even be able to be reduced in some circumstances.” It’s easy to request an extension, which will push your deadline to file your tax return to Oct. 15.
You don’t have to explain to the IRS why you’re asking for the extension – you just need to file Form 4868 requesting the extension by April 15. “Getting an extension of time to file your federal tax return is truly automatic by just taking a simple step: Let the IRS know you want the extension,” Scholl says.
You can file Form 4868 on your own, through a tax preparer or using a tax software program. People of all income levels can use the IRS FreeFile program to file an extension for free. On Form 4868, you’ll estimate your total tax liability and list any tax payments you’ve already made for 2024. You need to estimate the balance due and how much of that amount you’re paying. If you owe money in taxes, getting a tax extension doesn’t delay the deadline for paying – that money is still due by April 15. “An extension is for time to file your return, not for more time to pay,” says Steven Hamilton, an enrolled agent in Grayslake, Illinois.
You need to do enough work on your return before the original deadline to estimate how much you’ll owe and send the money with your extension request.
“Taxpayers are supposed to file the expected amount due with the extension request,” says Mary Kay Foss, a CPA in Walnut Creek, California. “If what they pay in with the extension does not put them within 90% of the final tax liability, the IRS can assess a penalty for failure to pay.”
You can make your payment electronically. “We recommend making your federal and state extension payments online instead of mailing in a check,” says Chelsea Monk, an enrolled agent and client manager at Hamilton Tax and Accounting in Miles, Texas. That way, your check won’t end up in a backlog of unopened mail. Check with your state’s department of revenue to find out if you need to file for an extension of your state income tax return, too. Source