About IRS Extensions
When you need more time to file your tax return or to pay any taxes owed, you can ask the IRS to give you an extension. This is a formal request for more time to do what's needed for your federal income tax return. Extensions are available for more time to file, as well as more time to pay taxes owed. Asking for an extension to file is fast, accurate and guaranteed by the IRS as long as you do so the right way. Asking for an extension to pay requires a little more work.
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Misconceptions
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If you are requesting an automatic extension on filing your tax return, that doesn't mean you are exempt from paying any taxes owed on time. If you owe taxes to the IRS, you must pay them by the deadline, April 15th, in order to avoid interest accumulating on the amount as well as penalty fees. An extension merely allows you to delay turning in a completed personal income tax return. You are still liable for the amount owed.
There are circumstances where a taxpayer can request an extension on paying taxes owed, but the process is more involved and not guaranteed. It is also a separate application process than the extension for time to file.
Process
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The way to file an IRS extension is straightforward. First, estimate how much income tax you owe using last year's amount or make a good estimate using the IRS website. Then, visit the IRS website and download the form called the Automatic Extension Form 4868. Complete the form and write a check for the estimated amount owed. Finally, mail the extension form and check to the IRS on or before April 15th. You can also submit the form electronically and pay any estimated taxes by credit card.
To request an extension of time to pay taxes owed, you will need to download a form from the IRS website that is called an Installation Agreement Request Form 9465. When you prepare your income tax return, attach the Installation Agreement Request to the front that includes the amount of the proposed monthly payment and the day you will make the payment each month. There are fees and penalties associated with this option that the IRS will make you aware of when they receive your request. -
Qualifications
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Whenever anyone submits an Automatic Extension Form 4868, it gives them an automatic extension in which they can prepare and file their individual income tax return. There are other extensions that apply to certain people, such as those in active military duty or for those who have been affected by a natural disaster, such as a hurricane. However, those exceptions are granted by the IRS and you will be notified if you qualify for those.
To request an extension for payment, most people are automatically granted a short extension with the correct paperwork, but longer extensions are harder to qualify for. Long-term payment arrangements and tax settlements are difficult to negotiate with the IRS and often require the services of a tax professional or tax attorney.
Time Frame
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The extension allows a 6-month grace period to file individual income tax returns as long as the correct forms are submitted by April 15th. This gives taxpayers until October 15 to file a return. Filing an extension to pay generally grants the taxpayer a 45-day grace period, however penalties and interest are added to the total due.
For a payment agreement, the taxpayer submits the proposal and the IRS representative agrees to it. If it is reasonable and timely, it will likely be approved. Payment agreements can be made for 45 days to at least 2 years, where an IRS review will be conducted to re-evaluate the agreement.
Warning
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Always communicate with the IRS about any form of extensions. Failure to file an income tax return or pay on taxes owed can lead to penalties, fees, collections action and even criminal charges if the violations are serious enough. If you have any questions or doubts as to the IRS extensions, contact a tax professional.
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