Tax Services

How to File an Extension

There are only a few days left to make this year’s tax return deadline on Tax Day – but who’s counting? If you are not ready, you probably should be. If you don’t take action on your tax return on or before April 15, you could be subject to penalties. If you file your federal tax return late and owe tax with the return, two penalties may apply.

  1. A failure-to-file penalty for late filing.
  2. A failure-to-pay penalty for paying late.

The failure-to-file penalty is normally 5% of the unpaid taxes for each month or part of a month that a tax return is late. The failure-to-pay penalty is 0.5% per month. When the two penalties are combined, the late filing penalty drops to 4.5%, so that the total penalty is 5%. The late filing penalty maxes out at 25% (about 5½ months); the late payment penalty continues to run until it, too, reaches 25%.

How to File an Extension ASAP

Don’t worry too much about the extra penalty to file because you still have time. The first step is to gather your tax documents. Get organized all at once so you don’t have to return to the task mid-stream. Then, choose the method to complete your taxes. (Of course, we are partial to using an experienced tax professional at Block Advisors!)

Steps to File an Extension

While it’s a good practice to file your tax return as early as possible, if you can’t complete the return on time, you can file an extension. To do this, you or your chosen tax preparer must complete and submit Form 4868.

Filing an extension will give you another six months of breathing room. There are a few rules you need to be mindful of. Your extension of time to file is not an extension of time to pay. Generally, you must pay at least 90% of your tax liability in order to avoid the failure-to-pay penalty. Another is that states have different rules on filing extensions. Many states require you to file a state extension in addition to a federal extension. You can look up your state here to see what the rules are. Some natural disasters also have an impact on tax filing deadlines.

While those who file an extension have until October 15, rules vary for the military and expats. If you are in the military or have a spouse on active duty in a combat zone, different rules may apply to you. And, if you are a U.S. citizen living abroad, your filing deadline is two months later than the rest of us, as explained below.

Combat Zone Due Dates

Generally, the deadline to file returns and pay taxes for members of the U.S. Armed Forces actively serving in a combat zone automatically extends to 180 days after their last day of service. See “When to file my return” in IRS Pub. 3, Armed Forces’ Tax Guide for combat zone and other extensions that apply to military service.

Expat Due Dates

U.S. citizens and residents with a tax home in a foreign country have until June 15, 2019 to file and pay taxes for 2018. If they are unable to file by that date, they must request an extension using Form 4868. Note that this extends the time four months (not six months!) to October 15, 2019.

What If You Are Not Ready for Tax Day?

While penalties for late filing may be steep, you have options. Your best bet is to work with an expert tax advisor who can get your tax documents organized to help expedite the process of filing so you can hit that April 15 deadline, or help you file an extension. Partner with an experienced tax professional, so down the road you don’t feel stressed, scrambled, or confused!

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