The deadline for filing your 2021 tax return falls on April 18, 2022. Returns must be filed electronically by midnight on that date or postmarked by that date or they’ll be counted as late. Find out more about why it’s important to file a tax return on time and how to file for an extension below.
Why File Your Tax Return on Time?
Filing your tax return on time is important because the IRS charges fees for late returns. This is in addition to the interest you might pay if you owe taxes and don’t pay them on time. The failure-to-file penalty is 5% of the taxes you owe for every month you’re late in filing. That maxes out at 25%.
So, for example, if you owe $1,000 in taxes and don’t file your return until August, the return is five months late. You’ll owe a penalty of 5% times 5 months, which is 25% or $250 extra.
What Is a Tax Return Extension?
Sometimes, you simply aren’t prepared to file your tax return come April 15. Some reasons might include not having all the documents you need or being unable to meet with your accountant in time.
The IRS provides for this issue by granting a tax return extension automatically to anyone who asks for it. You must file the request for an extension by the deadline for filing taxes for the year. That’s typically April 15 or the first Monday following April 15.
Note that the tax return extension does not extend your time to pay any taxes owed. To avoid penalties and interest on late tax payments, you can make an estimated tax payment before the April deadline and then settle the details later with the return.
What Is the Tax Extension Deadline?
The IRS gives you six more months to file your taxes when you ask for an extension. That means the new tax return deadline for you is October 15 of that year. Note that the October 15 deadline, like the April 15 deadline, does require that the 15th falls on a weekday. If the 15th falls on a weekend, the deadline is typically the Monday after October 15. This year, that date is October 17.
How to File for an Extension
Individuals who want to file for an extension for their tax return can complete a form via the IRS’s Free File. While the IRS limits who can use this tool to actually file a tax return for free according to income, anyone of any income level can use it to request an extension.
You can also request an extension via your choice of tax preparation software. Lastly, you can complete a paper extension form and mail it in. The form in question is called Form 4868.
Whichever method you choose, you’ll have to follow the steps below to complete the extension request.
- Provide your identifying information. That includes name, address, Social Security number and your spouse’s SSN if you’re filing jointly.
- Provide an estimate of how much taxes you might owe for the year.
- Provide the total tax payments you made (or were withheld from your paychecks) for the year.
- Calculate the difference to see if you owe anything.
- Send a payment for what you owe to avoid late penalties and interest.
Using a tax preparation software to file your return makes all these steps easier. You can enter all the information you already have for your return, and the software makes an estimate about how much you might owe based on that. It also auto completes all those boxes on the extension request form.
You aren’t tied to the amount you estimate. If you finalize your return later and owe less, that’s okay. If you paid based on the higher estimated amount, you should get a refund when you file your return in October.
Pros and Cons of Filing a Tax Return Extension
If you’re not ready to file, the automatic extension can be a huge benefit. You can complete one simple form and have the peace of mind that the IRS is allowing you a six-month grace period before it looks for your return.
On the downside, waiting to file does put you at a higher risk of tax return identity theft. If you haven’t filed, someone might use your details to file a false return and collect a fraudulent refund. Not filing early also means you won’t get any refund owed to you until later. Those looking to maximize their refund may not want to wait unless they have to.
The Bottom Line on Filing a Tax Return Extension
You can’t put off your tax bill by filing this extension, but you can avoid large failure-to-file penalties. If you don’t have the information you need to file an accurate tax return—or one that nets you the highest refund amount—by April, consider filing an extension request to be on the safe side.
