3 Things to Know About Getting a Tax Extension

Need more time to do your taxes? You're probably in good company.

Filing taxes isn't necessarily the most pleasant thing to do, and so some people might choose to put off the process as long as possible. But what if you end up doing so to an extreme? You may reach a point where you're running up against the April 18 tax-filing deadline and aren't ready with your return.

If that's the case, worry not -- you have the option to ask for more time to do your taxes. But it's important to understand the rules involved. Here are three things to know if you're thinking of getting a tax extension.

1. You don't need a good excuse to get one

Did you procrastinate on your tax return due to sheer laziness? That's okay!

The good thing about getting a tax extension is that the IRS doesn't require you to come up with a valid reason for wanting one, so you can table the "my dog ate my 1099" excuse for another time. All you need to do is request a tax extension by April 18, and you'll automatically get an additional six months to submit your return without being considered late.

Related: Best Tax Software

2. You may want to request one if you don't have all of your tax forms in time

Companies, banks, and financial institutions are required to issue tax forms by a certain deadline -- one that makes it more than feasible to submit your tax return by the April 18 deadline. But if you hold certain private investments, you may end up waiting longer on the tax forms you need. If that's the case, it could pay to ask for an extension. If you don't, and you calculate your tax refund or balance owed incorrectly, you'll end up having to amend your tax return, which could be a pain.

3. You won't get more time to pay your tax bill

A tax extension will give you six extra months to submit your tax return. What it doesn't do is give you any extra time to pay the IRS if you owe money from 2021. If you think you have an underpayment on your hands, it makes sense to estimate it and submit that sum to the IRS by April 18, even if your return isn't ready.

Now, you may be thinking, "What's the point of asking for a tax extension if I still have to pay by April 18?" The answer is simple.

When you owe the IRS money and don't submit your taxes in time, you get slapped with a failure-to-file penalty equal to 5% of your unpaid tax bill for each month or partial month your return is late. But if you get a tax extension, you won't face that penalty. (As a point of clarity, if you don't owe the IRS money, there's no penalty for being late with your return.)

If you don't pay your tax bill by April 18, you'll still accrue interest and penalties on the sum that's due. But you'll avoid that specific failure-to-file penalty, which is pretty substantial.

How to request a tax extension

If you think you won't manage to get your taxes done by April 18 this year, make sure to submit

Form 4868 to the IRS by that deadline to secure your extension. You can file that form electronically, which will help ensure it gets submitted on time.