How to File for a Tax Extension

By Cameron McCool on January 18, 2017

Filing for a federal tax extension is relatively straightforward, and it can benefit you as a taxpayer.

While an extension won’t get you out of paying your taxes by the regular tax deadline, it will give you more time to ensure you’ve taken advantage of the right tax deductions before you file your tax return (the paperwork) with the IRS.

Here are the steps you need to take to file for an extension of time to file your federal tax return.

1. Tax Extension Deadlines and Forms

Tax extension applications must be submitted on or before the regular due date of your business’s tax return.

To file for the extension, download the form that corresponds to your business type.

If your business is a partnership, multi-member LLC, or S corporation, You will also need to file Form 4868 to extend the filing deadline for your personal income tax return.

Partnerships: March 15, 2017

To qualify for an automatic 6-month extension, use Form 7004.

S Corporations: March 15, 2017

To qualify for an automatic 6-month extension, use Form 7004.

Sole Proprietors: April 18, 2017

To qualify for an automatic 6-month extension, use Form 4868.

C Corporations: April 18, 2017

To qualify for an automatic six-month extension, use Form 7004. Because the tax deadline for C corps is changing in 2017 (in previous years, the deadline was in March, not April), all corporations are eligible for an automatic six-month tax extension.

US Citizens and Resident Aliens Based Overseas

If you are a US citizen or resident alien, and you are living/running your business from outside of the United States on the regular due date of your return, you may qualify for an automatic 2-month extension. You can apply for the extension using Form 2350.

2. Submit Your Tax Extension to the IRS

The quickest way to submit your tax extension application to the IRS is to file it online.

You can also apply for a tax extension via regular post. Locate the correct mailing address in the table, “Where to File,” in the form instructions document (links above).

3. Pay Your Taxes on Time

When you apply for a tax extension, you’re asking the IRS for an extension of time to submit your tax return (the paperwork).

This means that while a tax extension will give you extra time to file your tax return paperwork, it does not give you any more time to pay the taxes you owe for the year.

When you file for a tax extension, you’re required to estimate how much tax you owe for the year, and pay that amount to the IRS before the regular tax deadline passes.

What Happens If You Underestimate Your Taxes Owed?

If you underestimate (and under pay) the taxes you owe, it’s likely you’ll be penalized by the IRS. You’ll normally face a “failure-to-pay” penalty of 0.5 percent of your unpaid taxes per month. It can build up to as much as 25 percent of your unpaid taxes.

This starts accruing the day after the filing due date, and applies for each month or part of month after the due date. In addition, you could also be subject to late payment penalties if you have a balance due, and you pay it after the due date.

In certain cases, if the IRS thinks your estimate is unreasonable, your tax extension may be declined and you could be charged late penalties.

For this reason, it’s better to overestimate the amount of taxes you owe. If you overpay, you will get back whatever you overpaid by way of a tax refund once your tax return is filed and processed. Alternatively, you can credit these amounts forward to cover your taxes owed for the next year.

If you’re unsure about the amount of taxes you owe for the year, talk to your CPA or tax accountant. They can estimate your tax payment for you. They can also file for a tax extension on your behalf.

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.

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Cameron McCool

Cameron writes for Bench, the online bookkeeping service for entrepreneurs.