April is the time of year when people start panicking about their tax return, and if you are one of the thousands of people who will not have their tax return submitted by midnight on April 15th then you need to file a tax extension. The good news is that it is easier than you think to file a tax extension both to delay submission of your tax form and also your tax payment. The Internal Revenue Service (IRS) provides two forms, Form 4868 and Form 1127, which are used to file for a tax extension and an extension to paying the tax you owe.
Form 4868 is the form you need if you will not be able to file your taxes by April 15th. This form can be submitted online or mailed to the IRS. On successful completion of the form the IRS will automatically grant you a 6 month extension meaning you will have until October 15th to file your taxes. In order to fill in your tax form you will need to estimate how much money you actually owe. If you only have a very rough estimate include some extra money as any underpayments will be penalised.
However if you do not have the money to pay your tax bill and you need an extension to pay then you require Form 1127. In contrast to Form 4868 being approved automatically Form 1127 will not be approved as easily. The IRS spend a considerable amount of time examining your income and your ability to get a loan in order to see if you can pay your taxes on time. It is only in cases where they believe that you genuinely cannot afford to pay your tax that they will grant you the four month extension to mid August. In many cases people do get offered an extension to pay their taxes.
When the new deadlines are granted it is important to make sure you pay on time or you will be subject to charges. These charges can amount to a considerable sum of money. If you file your taxes late past your agreed deadline you are subject to 5% of the tax owed for every month you are late paying, so if you are four months late you pay 20% of the tax you owe. Paying your taxes late also incurs extra charges. Interest is also added on to money you pay late.
By filling in the above forms you should get a tax extension and even an extension to pay your tax bill. But remember even when you get a tax extension you still have deadlines to file and pay your taxes and if you miss the second deadline you will be subject to penalties.