Tax day will soon be upon us. But don’t stress out if you haven’t yet figured out how you’re going to get your return filed by April 15th. You have an option that millions of taxpayers use every year: the Extension.
IRS form 4868 Application for Automatic Extension of Time must be sent in by the April 15th deadline in order to have a valid six-month extension with the IRS. Form D-410 does the trick with the N.C. Department of Revenue.
There are many different reasons why you may need to file an extension. Small business owners, for example, often need to get their business taxes completed before they can do their personal return.
No matter your reason for filing an extension, one rule applies across the board – an extension gives you extra time to file, it doesn’t give you extra time to pay. In order to qualify for an extension the IRS requires that you “properly estimate your last year tax liability”.
You can usually get a pretty good estimate by preparing a preliminary return using the information you know is good – a W-2 for example – and guesstimating the information you need more time to gather. Then apply the payments you have made through withholdings and/or estimated payments. For any amount still due a payment should be sent in with the extension.
Some advice for those who don’t have the money to send in with the extension, file the extension anyway. Remember we said earlier that the extension is extra time to file not extra time to pay? The IRS can hit you with two separate penalties for not sending in the extension (late filing and late paying) – but only one (late paying) if you send it in. So sending it in can only help and it certainly won’t hurt.
Whether you file the extension electronically or by mail it allows you six more months to get your act together.