Most of us are procrastinators at some point in our lives. This tendency to hold back tends to show up when we're facing particularly difficult decisions or tasks.
Tax filing time is one of those times. But waiting until the last minute can be costly.
If we get in a hurry to meet the filing deadline, which this year is Monday, April 18, forms filled out in a rush could be filled with errors. That will at best cost you tax dollars. At worst, it could result in an Internal Revenue Service audit.
Instead of filing a poorly filled out 2021 tax return, procrastinate a bit longer.
You heard right. Don't file your 1040.
File Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return in its place on April 18. This will get you an automatic six-month extension, until Oct. 17, to finish filling out your tax return.
Extension to file only: Two quick notes about the extended October deadline.
First, the official individual tax filing extension date is Oct. 15. But since that is on Saturday this year, it gets pushed to the next business day. That's Monday, Oct. 17.
Second, and more importantly, Form 4868 is an extension to file your tax forms. It is not an extension to pay any tax you owe. Some folks who seek extensions do so because they mistakenly think it will give them more time to pay.
Let me repeat that second point, since it involves money. You do not get more time to pay any tax you owe in connection with your annual tax return.
When you request your extension should cover you tax bill by either sending a check or money order along with the snail-mailed paper version of Form 4868 — yes, that's an image of it below, and yes, it's that brief — or by electronically paying your due tax and simultaneously getting more time to file.
Pay now or pay more later: Technically, you don't have to pay to get more time to file. The IRS will accept your extension request and grant you the added six months to do the paperwork, electronically or by hand, even if you don't pay what you owe.
However, Uncle Sam's tax agency also will start assessing late payment penalties, along with interest on that unpaid amount, as soon as the regular Tax Day deadline passes.
The late payment penalty is usually ½ of 1 percent of any tax (other than estimated tax) that's not paid by the regular due date of your return. Again, April 18 this year.
It's charged for each month or part of a month you don't pay the tax. It could hit a maximum of 25 percent.
Filling out Form 4868: As mentioned, the annual filing extension form is one of the shortest IRS documents.
The form itself takes up just about a quarter of the bottom of the first page of the extension package. The other 3¾ pages contain IRS explanations and filing instructions.
You'll enter just a few pieces of information on Form 4868. They are —
- Your name and, if filing jointly, your spouse's name, in the order in which they will appear on your tax return;
- Your mailing address;
- Your Social Security number (and spouse's nine ID digits if filing jointly);
- An estimate of your total tax liability for 2021 (yep, the IRS really, really would like you to pay at least some due tax money along with your extension request);
- Total of what you have already paid in taxes last year, such as payroll withholding and any estimated tax payments you made); and the biggie
- How much, if any, of the tax amount you entered earlier that you're paying with your filing extension request.
Taxpayers who are U.S. citizens or residents and who are out of the country also have a box to check. You also don't have to worry about this for a couple more months. Your regular Tax Day isn't until June 15.
There's also a final check box for taxpayers who file Form 1040-NR and didn't receive wages as an employee subject to U.S. income tax withholding. The Form 4868 instructions have more information for these filers.
Where to file 4868: Like many other IRS forms, you can submit your extension request electronically.
If you use tax software, your program of choice should help you complete and submit it. You also e-file Form 4868 if you use Free File, the IRS-tax software companies' online cost-free tax filing option. This filing season, you can choose from eight Free File participating software companies if your adjusted gross income is $73,000 or less, regardless of filing status.
If you opt for a paper Form 4868 filing, mail your extension request to the appropriate IRS location shown below:
You'll see that there are different U.S. Postal Service mailing addresses depending not only on where you live, but whether you're submitting a payment with your Form 4868 or sending in just the form.
Maybe you're not sending in any cash because you just don't have it. Or maybe you set up a payment plan with the IRS. Of maybe you don't owe anything, but still want to get more time to file.
Whatever your extension situation, if you're snail mailing your request, send it to the proper IRS office.
Paying your well-guesstimated tax due: OK, you're getting more time to file. Now about that outstanding tax bill.
It's time to decide how to pay what you owe so that your 4868 filing will be complete.
If you're mailing the paper form, you can include your check or money order, made payable to the U.S. Treasury, with the request.
Electronically, you have more options. Just go directly to one of the IRS-approved e-pay options. Two popular and easy options are:
- Direct Pay, which as the name says, directly transfers the amount from your bank account;
- Credit or debit card.
There's also the Electronic Federal Tax Payment System, or EFTPS, which is what I've used for years, including this one. It's set to send the money the hubby and I owe on Monday. But one downside of EFTPS is that it has to be set up beforehand. So if you don't have an account set up yet, you might want to consider it for future tax payments beyond extension requests.
You can find more on these and more e-pay options in my ways to pay taxes post, as well as your options if you can't pay your tax bill in full. And, of course, there always is IRS.gov's How to Pay Your Taxes webpage.
Extend, pay, get it right: Regardless of which way you file Form 4868 and pay as much due tax as you can, do it by Monday, April 18. Even a partial payment will reduce any interest and late-payment penalty amounts.
Getting an extension on time also will show the IRS that you know you the tax deadline and that you owe. It also will let Uncle Sam know you are making an effort to fulfill your filing, and paying, responsibilities.
Then take a breath. You've now got plenty of time to do your taxes right. When you're ready to finish (or start) filling out your 2021 tax year return, concentrate on filing a correct (no mistakes, please!), complete (claim all your tax breaks, especially those available if you don't itemize) tax return.
You also might find these items of interest:
- 5 April tax filing moves
- Tax Tips to help file your 2021 return: January, February, March, and April
- VITA & TCE volunteers are back, helping taxpayers prepare & file returns for free