For most Americans, tax season ended almost six months ago on April 15. But those who instead filed a tax extension have hopefully spent the last six months preparing for their extended deadline, which is coming up on October 15.
Tax extensions allow taxpayers who are unable to complete their taxes by the filing deadline to instead file for an extension with the IRS, giving them an extra six months to complete their tax returns for the previous year.
What do those who are coming up on the tax-extension deadline need to keep in mind? Here are three last-minute tips:
- Tax extensions extend your filing deadline, not your paying deadline. A common misconception about tax extensions is that they allow a person to avoid paying taxes for an additional six months. In reality, the extension only gives an individual more time to file a return; taxes that may be due at the time of filing for the extension must still be paid at the time of filing the extension. If you failed to pay estimated taxes you may owe interest and penalties on taxes that were unpaid.
- What if you still aren't ready to file on October 15? Except under limited circumstances to members of the military or U.S. citizens living abroad, the IRS generally does not offer additional extensions past the six-month extension received by filing Form 4868. Failing to file your taxes by the extended deadline will cause you to incur late-filing penalties in addition to the amount of taxes owed.
- What if you can't pay what you owe? If you've filed a return and determined that you owe less than $50,000 in taxes, you can file an installment agreement request. Along with a one-time installment fee, if your request is granted you will be able to pay off your tax bill in monthly installments.