U.S. Individual Income Tax payers can qualify for an automatic extension of time to file their tax return by filing IRS Form 4868. Though the form only has nine items to complete, the instructions are an intimidating three pages long. The most complicated process for the tax payer will be estimating their total tax liability and ensuring that they have paid at least that amount into the IRS before the tax filing deadline of April 15th.
Form 4868 entries 1, 2 and 3 are self explanatory – Name, address, social security number(s). Entry number 4 is where the taxpayer must already have a good idea of what their tax situation is because filing form 4868 does not provide an extension of time to pay taxes due, but in most cases only a six month extension to file a completed Individual Income Tax return.
The easiest way for a tax payer to estimate their total tax liability is to take a current year Form 1040 and enter all income and deductions. After calculating the tax liability according to tax tables or formulas, the tax payer will enter this amount on entry 4, Form 4868.
The taxpayer will then calculate all credits due and payments. Payments will include Federal Income Tax withheld and estimated tax payments. This corresponds to line 72 less line 68 on Form 1040. The taxpayer will enter this amount on line 5. Line 6 is the difference between line 4 (estimated total tax liability) and line 5 (total payments). Line 6 needs to show a zero balance due or a potential refund. If line 6 shows an additional balance due then the tax payer will enter on line 7 the amount they are paying with Form 4868.
The taxpayer must understand that all of their individual income taxes are due on 15 April (which can be moved back up to a few days in the event that the fifteenth falls on a weekend or holiday). If unable to pay the amount shown on line 7, the taxpayer is liable for additional penalties and interest on the unpaid portion. It is therefore suggested that the taxpayer pay as much as possible with Form 4868. The due date for Form 4868 is the income tax due date of 15 April. Deadlines for fiscal year taxpayers and taxpayers who are out of the country vary.
Form 4868 needs to be postmarked no later than 15 April and the taxpayer is granted an automatic six month extension of time to file. Most taxpayers want to know why go through filing for an extension if all taxes are due anyway. If a taxpayer lacks complete documentation for their income or deductions, is away from home, or in some way prohibited from filing a valid return on time then Form 4868 can give the taxpayer enough time to file an accurate return.