(NEW YORK) — Tax season, beloved by few and dreaded by many, comes to a close on Monday. For some tardy filers, though, the task will just be getting started.
Up to one in three Americans waits until the last minute to file their taxes, according to a 2021 survey by IPX 1031. That amounts to tens of millions of people.
A portion of them will realize that they do not have enough time to submit their taxes by the end of Tax Day. Luckily, the Internal Revenue Service offers the opportunity to file for an extension.
Here’s what to know about whether to file for an extension, what it requires and how long it lasts:
What are the benefits of filing a tax extension?
A tax extension pushes back the filing deadline, affording taxpayers additional time to get their submission in order.
An extension, however, does not allow filers to delay payment. If a filer thinks he or she might owe the government money, then the person must hand over the estimated amount by April 15. If not, the filer stands at risk of paying penalties and interest.
When estimating how much they owe, filers should keep in mind changes to the tax code, such as updated tax brackets and new tax credits. Knowledge of those rules can help filers optimize their tax refund.
If a filer forgoes an extension and files late, the person risks additional fees for the tardy submission. The penalty amounts to 5% of the taxes owed for each month that the filing is late, up to a maximum of 25%.
Under such circumstances, the IRS mails a letter or notice alerting the filer of a late fee.
How do you file a tax extension?
Before filing an extension, a taxpayer can check to see if he or she qualifies for an automatic extension. That option is available to people who live in a federally declared disaster area, members of the military stationed abroad or in a combat zone and citizens living outside the U.S.
Otherwise, an extension can be submitted in one of three ways.
First, if an individual opts to pay the anticipated amount owed, he or she can check off an extension-request box in the IRS online payment portal.
Alternatively, a filer can submit an online extension request through the government’s free service, IRS Free File.
Finally, the taxpayer can always go about it the old-fashioned way by mailing the extension. Such filers should fill out the Form 4868 and send it to an address listed on the IRS website. The form requires filers to estimate the amount of tax owed for the filing year.
Tax professionals can also assist filers in obtaining an extension.
The extension request must be submitted by the end of the day on April 15.
How long does a tax extension last?
A tax extension lasts six months, meaning those who obtain an extension will be allowed to submit their tax forms without penalty until Oct. 15.
Some may not want their tax season to end before that, however. They’re welcome to file taxes at any point over the six-month period.
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