Americans typically have to file and pay the remainder of their taxes for the prior year by April 15 of any given year. For filing 2016 taxes in 2017, since April 15 falls on a Saturday and the next Monday is a holiday in Washington, D.C., the national deadline will be Tuesday, April 18. Those extra few days are nice to have, but they still may not be enough for everyone to get their taxes in.
If you're among those who can't file their taxes by April 18, don't despair. You can get an automatic six-month extension to file your taxes by filling out and submitting IRS Form 4868. While you can get an extension to file, you should still be sure you get your taxes paid by April 18 in order to avoid the penalties and interest for underpaying.
Why might you need an extension?
The IRS doesn't care why you're asking for that automatic six-month extension to file, just that you ask for it before the official tax filing deadline. You can even be planning an around the world cruise and simply not want to bother with the tax paperwork until you return.
Whatever your reason for needing an extension, the IRS provides a very strong encouragement for you to file for one on time if you need it. There's a penalty for failing to file of 5% of your taxes due per month, up to 25% of your total taxes owed. If you're more than 60 days late filing, the minimum penalty is the smaller of $135 or 100% of the taxes you owe. If you owe $2,500 and fail to file your taxes, the IRS may very well ask for as much as $625 extra, just for not filling out the paperwork.
It's important to note that the failure-to-file penalty is on top of any failure-to-pay penalty if you don't pay your taxes on time. If you're filing an extension, you need to have at least 90% of your taxes for the year paid up when you file, or else you may be subject to that failure-to-pay penalty. You'll still owe interest on any taxes you pay after the April deadline, but you can at least avoid the penalty by getting close.
The point of the extension to file, after all, is to give you the opportunity to get your paperwork correct so that you and the IRS have a clear understanding of what you owed and paid for the year. Even if you don't have all of the forms and information you need to get your taxes 100% correct by the April 18 deadline, you should be able to get pretty close to knowing your total bill by that date. Once you do file your final paperwork, you and the IRS can then square up on the final amount owed.
The clock is ticking -- so get ready to file
As of this writing, you have about two months remaining to either file your 2016 taxes or request an extension. By this point in February, you as an individual should have most, if not all of the forms and data you need to complete the process. Still, there may be a few things missing.
If your investments or employer have a history of generating revised tax record paperwork, you may want to wait a bit to see if a revision is generated before you file. In addition, if you are a partner in a partnership, you may not get all that paperwork until the middle of March, once the partnership filing deadline passes.
Regardless of whether you're expecting last-minute paperwork or changes to already received forms, what you have in your hands should be enough to get you close to what your total tax will be. That should at least be enough for you to file for an extension and pay up to pretty close to your total taxes owed, which will keep the IRS's penalties away.
If you can file your taxes by April 18, it's better to get it done than to sit on the paperwork. If you can't, you can rest assured that you have the ability to file and get an automatic extension.