How to file a tax extension?

Below is a step-by-step guide on how to file a federal income tax extension in the United States, along with details about which form to use, important deadlines, and other tips. The focus here is on individual taxpayers (Form 4868), but we will also briefly cover business extensions (Form 7004) and relevant state-level considerations.

1. Determine Which Extension Form You Need

1. Individuals (Including Sole Proprietors):
   • File Form 4868 (Application for Automatic Extension of Time To File U.S. Individual Income Tax Return).
   • Applies to Forms 1040, 1040-SR, 1040-NR, etc.
2. Partnerships, S-Corps, and Certain Other Businesses:
   • File Form 7004 (Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns).
   • Covers partnership returns (Form 1065), S-corporations (Form 1120-S), and some trusts.
3. C-Corporations:
   • Also use Form 7004 for an automatic extension of corporate returns (Form 1120).

Important: An extension only extends the filing deadline, not the time to pay any taxes owed. You must estimate and pay any expected tax due by the regular tax due date to avoid penalties and interest.

Authoritative Source:

• IRS Form 4868 (PDF)
• IRS Form 7004 (PDF)

2. Know the Key Deadlines

• Individual Taxpayers:
  • Standard filing deadline is typically April 15 (may shift if it falls on a weekend or holiday).
  • File Form 4868 by April 15 (or the current year’s adjusted date) to receive an automatic 6-month extension (generally until October 15).
• Business Entities:
  • Partnerships and S Corporations: Returns are generally due by March 15, with a 6-month extension if Form 7004 is filed on time (new due date around September 15).
  • C Corporations: Typically due by April 15 for calendar-year entities, with a 6-month extension if Form 7004 is filed (new due date around October 15).

Authoritative Source:

• IRS Publication 509: Tax Calendars

3. Estimate and Pay Any Tax Owed

Even if you can’t file your full return on time, the IRS expects you to estimate your tax liability and pay as much as possible by the original due date. Failing to pay at least 90% of your tax obligation can lead to:

• Late-Payment Penalties (typically 0.5% of the unpaid taxes each month, up to 25%)
• Interest Charges (currently calculated at the federal short-term rate plus 3%, compounded daily)

If you pay what you reasonably estimate you owe, you’ll minimize or avoid these penalties and interest. Any remaining balance is typically due by the time you file your actual return (on or before the extended due date).

4. Filing Options

You have three main ways to file an extension:

1. Electronically (E-File)
   • You can submit Form 4868 (or Form 7004) electronically using tax software (e.g., TurboTax, TaxAct, etc.) or through many tax professionals.
   • The IRS acknowledges receipt quickly, which gives you peace of mind.
2. Online Payment with Direct Pay or EFTPS
   • If you pay all or part of your estimated taxes using IRS Direct Pay or EFTPS, the IRS automatically counts this as an extension request (if you designate the payment for an extension).
   • You don’t have to file Form 4868 separately in that case, as the extension is granted automatically when the IRS receives your payment with the correct notation.
3. Paper Form 4868 or 7004
   • Download and print the form.
   • Fill out the necessary details, including your SSN or EIN, tax year, and estimated tax liability.
   • Mail it to the address specified in the form’s instructions.
   • Must be postmarked on or before the due date to be considered timely.

Authoritative Source:

• IRS Direct Pay
• Electronic Federal Tax Payment System (EFTPS)

5. Confirmation and Follow-Up

• Electronic Filers:
  You should get an electronic confirmation shortly after submitting your extension request. Keep that email or confirmation number for your records.
• Paper Filers:
  The IRS does not send an automatic confirmation for mailed forms. For proof, consider using Certified Mail or an IRS-approved private delivery service so you have a tracking number and dated receipt.
• No “Approval” Required:
  Extensions are automatic; as long as you file on time (and pay enough tax), you should not receive a separate notice of approval. You may receive a follow-up if your extension was incomplete or late.

6. State Tax Extensions

• Not All States Mirror the Federal Extension:
  Some states automatically grant a 6-month extension once you have a federal extension, but others require their own form and possibly an estimated payment to secure the extension.
• Check Your State Rules:
  Always confirm via your state’s Department of Revenue website. For example, California generally grants an automatic extension for individual filers, but you still must pay on time to avoid penalties.

Example:

• California Franchise Tax Board – Personal Extension
• New York State Department of Taxation and Finance – Extension Info

7. After the Extension Is Filed

1. File Your Return by the Extended Deadline:
   • For individuals, typically October 15 (or the next business day if it falls on a weekend/holiday).
   • For businesses, typically September 15 or October 15, depending on entity type and tax year.
2. Pay Remaining Balance:
   • Any unpaid taxes are generally due by the time you file your actual return.
   • Penalties and interest accrue on any amount unpaid after the original filing date.
3. Gather Documents:
   • Use the extension period to obtain missing W-2s, 1099s, K-1s, or other tax documents.
   • Ensure you have all supporting schedules (e.g., for deductions, credits, or self-employment income).

Example Timeline for Individual Filers (Tax Year 2023 → Filed in 2024)

• April 15, 2024 (Approximate):
  • Original filing deadline (if not a weekend/holiday).
  • File Form 4868 (or pay via IRS Direct Pay with “extension” selected) to get a 6-month extension.
  • Pay as much of your estimated tax as you can to avoid penalties.
• October 15, 2024 (Approximate):
  • New deadline to file your completed return under the extension.
  • Any remaining balance due must be paid now.

Key Takeaways

1. Use the Correct Form: Individuals file Form 4868; businesses often file Form 7004.
2. Extension ≠ Extra Time to Pay: You must pay at least 90% of your expected tax by the original deadline to minimize penalties.
3. E-File for Convenience: Online or software-based filing is faster, and you get confirmation.
4. State Rules May Differ: Check your state’s tax authority for separate deadlines/forms.
5. Keep Records: Save confirmations, receipts, and any relevant correspondence to prove you met deadlines.

Authoritative References:

• IRS Form 4868 Instructions
• IRS Form 7004 Instructions
• IRS Topic No. 304 – Extensions of Time to File

Final Note

Filing an extension is relatively straightforward and buys you extra time to submit a complete and accurate return—but not extra time to pay. If you’re unsure about your extension filing or payment obligations, consider consulting a CPA, an Enrolled Agent, or a tax attorney for personalized guidance.

Disclaimer: The information provided is for general informational purposes and should not be considered legal or tax advice. Tax laws are complex and subject to change. For advice specific to your situation, consult a qualified tax professional or refer to official IRS resources.