How Does a Tax Extension Work?

Sometimes people require more time in order to file their tax returns properly with all the correct documentation, and may not be able to file their tax returns appropriately before the April deadline. In this case, they can apply for a tax extension, which automatically gives them more time to file their taxes accurately. It should be noted, however, that a tax extension does not apply to your tax payments. Your tax payments still need to be paid by the April deadline or you will be subjected to penalties and interest. No one can extend their tax payment deadlines without incurring interest and penalties.

Generally speaking, the IRS considers tax extensions as automatic, meaning that most people who apply for a tax extension will be automatically granted one. Tax extensions are usually only rejected if you fill out the form improperly, or if you are required to file your tax return due to a court order. Tax extensions can be applied for with both paper forms and electronic forms, though electronically requesting a tax extension tends to be much easier and quicker to do.

If you are seeking a tax extension, it is advisable to request one a considerable amount of time before the April deadline. If your tax extension request is rejected (for whatever reason) when you’re already very close to the deadline, then you’re going to find yourself out of options.

If you successfully receive a tax extension, your deadline is pushed up by 6 months. For example, if your tax return deadline is April 18, then your new deadline would become October 17. If you miss this new deadline, then your tax return will be considered late. You cannot ask for a second extension on the same tax return.

It is important to reiterate that tax extensions are extensions of time which are designed to allow you to get all of your appropriate paperwork and documentation in order. You still have to pay your tax money by the April deadline, otherwise you will incur penalties and interest fees. No one is able to extend their tax payment deadlines.

Contrary to popular belief, tax extensions do not necessarily harm your relationship with the IRS, partially due to the vast volume of returns that the IRS has to process around April. Taxpayers who request tax extensions are actually less likely to be audited by the IRS, as their (eventually completed) tax returns are more likely to be complete and fully accurate, with all the necessary documentation being in order. The IRS prefers that you file your tax return late and properly (via an extension), rather than on time and improperly.

Special rules for tax extensions apply to those who serve in the military, as well as US citizens living abroad and a few other groups. State tax extensions may also vary slightly from state to state, so be sure to clarify any rules and exemptions that may apply to you and your current circumstances.