Your Tax Extension Options (and How To Take Advantage of Them)

Tax extensions are common. IRS data shows approximately 10% to 15% of taxpayers file an extension per year.  If you file the proper forms, you could get six more months to file your tax return. However, there are some specific rules and requirements to be aware of — especially if you want to avoid the possibility of a penalty. 

Read on to learn what a tax extension means, how to get one, and how to use this extended tax deadline to your advantage.

What Is a Tax Extension?

A tax extension is a way to obtain additional time with the Internal Revenue Service (IRS) to file your federal tax return. It essentially means you don’t have to complete your federal tax return by the regular due date, which is usually April 15 (unless this date falls on a weekend or holiday). 

Who Is Eligible?

Generally, anyone, regardless of their income level, is eligible to file for a tax extension. This includes resident and non-resident aliens. Your request is for an automatic six month tax-filing extension, and you don’t need to justify your reasoning. All you have to do is complete and mail or efile IRS Form 4868, Application for Automatic Extension of Time to File U. S. Individual Income Tax return. You also need to make sure you pay at least 90% of your total taxes due for the year. Just make sure you’ve done both of these things if applicable, by the regular due date, which is usually April 15.

What’s the New Tax Deadline?

Generally, a tax extension is good for six months. This means that your new tax deadline would land around October 15. If October 15 lands on a weekend or legal holiday the date is delayed to the next business day. For tax year 2023, the extension deadline is October 15, 2024.

Under special circumstances, this date might be a little different. For example, if you’re a U.S. citizen or resident alien and you’re living or stationed outside of the country, you’re allowed an automatic two-month extension from the regular due date. That makes the automatic 2-month tax deadline on June 15. 

You may also get an automatic extension if you’re in a disaster area. This depends on decisions from agencies such as the Federal Emergency Management Agency (FEMA).

Is My Payment Extended, Too?

It’s critical to note that a tax extension applies to filing your return, not your payment if you owe taxes. That means your estimated tax is still due at the regular deadline.  It’s your responsibility to estimate your tax liability and pay on time. If you don’t, you may incur a penalty and have to pay interest on your original tax bill.

Do Extensions Apply to All Income Tax Returns?

Some states accept the IRS tax extension rules, while others require you to file a separate state extension request. That means a tax extension may only apply to your federal return. 

Can I Get Another Extension?

In most cases, you can only get one extension per return. Essentially, if your date is extended to October, you can’t ask the IRS to give you even more time.

Can The IRS Reject My Extension?

Although the IRS doesn’t reject many extensions, it is possible that your extension request gets rejected. Most of the time, this is just due to incorrect information or typos, and the IRS gives you five days to fix the error(s) and resubmit your form that was timely e-filed but later rejected.

Should I Use a Tax Extension?

There are plenty of good reasons to use a tax extension. They’re free to file and you won’t have to pay more on your taxes for filing late if you use a federal extension if you pay at least 90% of the total tax due by the original due date of the return. Plus, if a little more time makes it easier to claim the right tax credits or make sure you’ve covered all your bases, there’s no reason to skip this valuable opportunity.

How To Get a Tax Filing Extension

Once you know how tax extensions work, what the rules are and how you can benefit, it’s time to get started. Here’s what to know about requesting your extension:

Planning Your Extension

Remember that the due date for extension requests is by your regular due date — usually April 15. Because this date is fairly consistent every year, you should have plenty of time to plan ahead and decide whether you need an extension. For example, if you’re going to be out of town right around the time your return is due, it might be easier to request an extension.

Finding Your Form

If you’re an individual, you need IRS Form 4868. This applies to those who are married and filing jointly, too. If you’re filing taxes for your business, you’ll need Form 7004. 

There are special circumstances where you might need different paperwork. For example, if you need an extension for estate taxes, you might need Form 4768. All these forms and more — plus detailed explanations of when to use them — are available on the IRS website.

Filing Your Form

You can file for a tax extension in the same way you would file your tax return itself. Many people use tax software — but in some cases, you might choose to print out a form and mail it to the IRS. If that’s your plan, give yourself plenty of time for any postal delays and make sure to get proof of when and how you mailed the form.

Once you’ve filed for your extension, your only job is to wait. If the IRS doesn’t send a rejection notification, you’re good to go.

How To Use a Tax Extension To Your Advantage

Let’s say you did everything just right, and your extension is finalized. How can you make sure you use this opportunity wisely? 

Check out these last-minute tax tips to help you get the most out of your extension:

#1: Double-Check Basic Information

The IRS automatically corrects certain errors and notifies you of others. While this isn’t necessarily cause for worry, it can extend the process and delay any potential refund. Since you have this extra time anyway, it makes sense to double-check information including:

• Your current address
• Your Social Security or Taxpayer Identification Number
• Your filing status
• Your income

You can easily import your W-2 from thousands of partners when you file with TurboTax to save you time and ensure accuracy when filing your taxes.  

#2: Get Organized

If you filed for an extension because you felt you needed more time to gather all the documents, forms, and tasks you need to juggle, this is a great opportunity to create a “tax plan.” You can use this plan to file this year, but it also can grow and change for future tax years to help keep you on track as your financial needs shift. Here are a few ideas to get you started:

• Save records of expenses, especially receipts
• Keep forms of the same type together
• Scan paper documents to organize them electronically
• Store receipts from tax payments or refunds
• Create checklists for gathering documents, completing steps, and sending returns
• Bookmark helpful IRS pages, blog posts, and your favorite tax software or solution

#3: Brush Up on Tax Deductions and Credits

You may be eligible for a tax credit or deduction you’ve never heard of. Although TurboTax automatically searches a database of options to see what applies to your unique situation, this is a great time to learn what those deductions and credits look like. That way, you can make financial decisions that may later reduce your income tax liability.

For example, maybe you’re thinking about getting a new car. If you know about the clean vehicle tax credit, which can be up to $7,500, you’ll have the details you need to buy a make and model that could benefit you down the road.

#4: Find Live Help

You have a lot of choices when it comes to filing your taxes. An extension gives you a chance to take another look at these options and find out what works best for you — and next year, you’ll know exactly where to start.

#5: Learn What You Can

Now that you have your tax extension, there’s no need to rush. Ask all your questions, carefully read every form, and learn what income tax really means for your financial situation. This can also be a learning opportunity for the future:

• Starting a small business? Take the chance to learn how your next tax return will differ.
• Leaving your job to be a contractor? Use this extra time to compare your current tax situation to self-employment tax rates and costs.
• Have kids? Aside from being dependents who can help reduce your overall income tax payment, children can be learners. Show them how you file your taxes to build their financial literacy.

Take Advantage of Your Tax Extension With TurboTax

Taxes can be challenging whether or not you decide to take advantage of a tax extension this year. However, if you want to get the most out of your extra time, answer any questions, and make sure your tax return is done right, make sure to come to TurboTax for the expert guidance you need.