Avoid These Tax Extension Mistakes

 

It’s easy for things to get complicated whenever you’re dealing with taxes and the IRS. Luckily, getting a tax extension is relatively easy and stress-free — especially when you use an Authorized IRS e-file Provider like TaxExtension.com. Nonetheless, mistakes can still be made when filing a tax extension application. Here are some common oversights that you should be aware of when applying for your Federal tax extension.

DO NOT ASSUME THAT:

A tax extension gives you more time to pay your taxes.

A tax extension provides you with extra time to file your return. It does not give you more time to pay your tax balance, which is still due by the original deadline of your return. If you don’t pay your taxes by the proper due date, the IRS will assess penalties and interest on the unpaid balance. You can avoid this by e-filing your tax extension at TaxExtension.com, where you can also make an electronic tax payment with your extension request.

Tax extensions are automatic, so you don’t need to apply.

The IRS calls tax extensions “automatic” because they are automatically granted as long as the taxpayer completes and submits an extension application (Form 4868 for individuals, or Form 7004 for businesses) on time. This means that you must file a proper tax extension request in order to receive the extra filing time. Also make sure to submit your tax extension by the original deadline of your tax return.

You need to file a tax extension even if you're expecting a tax refund.

This is one of the best-kept secrets about Federal tax extensions. Taxpayers who are expecting a tax refund from the IRS actually don’t need to file an extension application (Form 4868 or Form 7004). If you owe zero taxes, any penalty that the IRS could charge would come out to $0 (because penalties are assessed as a percentage of your unpaid tax). Therefore, there is no IRS penalty for filing late as long as you have no tax balance. But you need to be sure that your owe zero taxes before taking advantage of this loophole. Also remember that you cannot get your tax refund until/unless you file your tax return.

The IRS will grant you more than 6 months to file.

You can easily file for a 6-month tax extension (or 5 months for certain businesses), but it’s very difficult to get additional time beyond that. The IRS is not in the habit of granting second or additional tax extensions, except in a few specific instances — this includes special provisions for U.S. military members, as well as U.S. taxpayers who are “out of the country” at the time their tax return is due. All other taxpayers are expected to file their return by the established deadline.

 

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