No articles found to show on this page.
Columnist Jennifer Jolly tests apps and help sites for finishing your taxes.
Jennifer Jolly, special for USA TODAY
If you need more time to complete your tax return in 2018, a tax extension is an easy way to get it. The form to request an extension is short, and in most cases, an extension is granted automatically. Before you submit your application for an extension, however, there are a few things you should know about the process and what a tax extension does (and does not) do.
The procedure is easy and automatic
If you don’t have all of the documentation you need to meet the standard tax filing deadline of April 17, or if you just need a little more time to get your return submitted, a tax extension can get you more time to file. A tax extension gives you an additional six months to file, and because Tax Day is ordinarily on April 15, the extended tax deadline for 2018 is Oct. 15.
Filing for an extension is rather easy. You can do it by filing IRS Form 4868 — also known as the Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You can submit it either in paper form or online, and if you file your taxes with a software program, such as TurboTax, there’s often a way to file through your chosen program as well.
Filing a tax extension is completely free. And as the name of the form implies, in most cases, an extension is automatically granted — meaning that there are no special qualifications you need to meet. Any taxpayer who requests the additional time is typically granted the extension.
Here’s what a tax extension doesn’t do
Here’s the most important point. A tax extension does not change the tax payment deadline. It simply gives you more time to file your return.
Any tax liability is still due by the April 17 deadline. In fact, when you file for an extension, you’re asked to estimate how much you’re going to owe the IRS.
Any unpaid balance that remains after the April 17 deadline can accrue interest and penalties — even if you’ve filed for an extension and even if you didn’t realize that you would end up owing the IRS money. The current IRS interest rate is 5% per year, compounded daily. If you pay at least 90% of your taxes owed along with your extension, you won’t pay a penalty, but interest applies regardless.
If you can’t pay, file anyway
Finally, it’s also important to emphasize that the IRS penalty for failing to file your tax return (or for an extension) is much more severe than the penalty for failing to pay. Ten times more severe, actually.
For every month or part of a month that you owe the IRS money, with a few exceptions, you’ll be penalized 0.5% of the unpaid amount. On the other hand, if you don’t file a return or extension request in a timely manner, you’ll be penalized 5% of the unpaid balance per month or partial month, up to a maximum of 25%. These penalties can potentially be waived if you show “reasonable cause” for not paying or filing, but there’s no guarantee that the IRS will consider your excuse to be reasonable.
The point is that even if you can’t afford to pay your tax bill to the IRS, you should still file your return, or an extension form, by the April 17 tax deadline.
If you’re not getting a big tax refund, you’re doing something right. Receiving a large refund means you’ve overpaid relative to the total tax obligation that you will tote up at tax time.
The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
Offer from the Motley Fool: The $16,122 Social Security bonus most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,122 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.