Filing your tax returns on time is important to avoid penalties for tardiness. In most cases, this means you'll have to submit your 1040 forms by April 15, which is usually tax day. If the 15th is on a weekend or a holiday, your forms will be due on the next business day.
Unfortunately, sometimes things come up and it becomes difficult or impossible for you to make the deadline. If you're worried that will happen to you, it's easy to request an extension of the time to file. However, there are some important caveats to be aware of, including the fact that a delay in the filing deadline doesn't allow you to pay your taxes late without incurring a penalty.
Here's what you need to know about how to file a tax extension and what the implications are of doing so.
How can you request more time to complete your tax returns?
If you are an individual tax filer and you need a tax extension, you simply have to submit a single form to the IRS: Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return [opens PDF].
The form can be filed via mail or you can e-file it at no cost using Free File. When you submit it, you're granted an automatic extension of your tax filing deadline. You don't have to wait for the IRS to approve your request for more time.
However, you must submit your Form 4868 by the normal due date for your returns in order to get your extension. So if you want to delay filing your 2020 taxes, you will have to request more time before April 15, 2021 when your 1040 forms would otherwise be due.
You also have the option to request an extension if you pay your estimated income taxes in full using Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or using a credit or debit card. If you indicate you need an extension when you make your estimated tax payment, you won't need to file Form 4868 just to get more time to file your returns.
How long is the tax extension for?
When you request an extension of time to file your taxes, you will have until Oct. 15 to complete and submit your returns. Again, if Oct. 15 falls on a weekend or on a holiday, the deadline will be on the next business day.
You still must pay your taxes on time
An extension gives you more time to file a tax return but it doesn't change the deadline when payments are due. If you owe the IRS money, you should pay it on or before the April deadline. Failure to do so could result in accruing penalties and interest.
There is one exception to this general rule, though. If you've paid in at least 90% of the amount you owe the IRS by April 15 and you requested an extension of the filing deadline prior to tax day, you will avoid the customary failure-to-pay penalty. You'll have to pay your outstanding balance before the October extended deadline though.
Always file your taxes or request an extension by the deadline
If you're worried about your ability to file or pay your taxes, it's best to be proactive and request an extension. It's also important to file your returns by the April or October deadline even if you cannot pay the full amount due. That's because the failure to file penalty is substantially higher than the penalty imposed just for failure to pay.
When possible, you should get both your payments and returns submitted by April so you don't have taxes hanging over your head well into the subsequent year. But if you can't do that, just make sure to let the IRS know that you need until October to get things done -- and then set aside the time to be sure you hit that extended deadline to avoid potentially serious financial consequences.