Tax Extension: How to file a tax extension?

It is officially tax season, meaning you can now file your 2019 tax return! By this point, you should have received your W-2 (Understanding your Form W-2) and/or Form 1099 from your employer(s), and so, you can now file your 2019 tax return at your convenience until the tax return deadline of April 15. However, as always, you do have the option to file a federal tax extension to extend your filing deadline to October 15.

Related Posts
- The Complete List of Tax Credits for Individuals
- Dependency Definitions: What is a qualifying child and a qualifying relative?
- Take advantage of a declining market by saving on taxes
- Guide to Taxable Income for Individuals

How do I file a tax extension?

As stated, the IRS offers a tax extension to all taxpayers regardless of any reason for needing the tax extension. The tax extension gives you an additional six months to file your federal tax return, extending the filing deadline from April 15 to October 15 (date subject to change based on weekends and holidays).

Below, I will detail the three easy steps to get an extension on your federal tax return. You will need to estimate and pay your tax liability, complete the Form 4868, and submit the Form 4868 to the IRS.

Filing a Tax Extension - Step 1: Estimate and pay your taxes owed

You must still pay your tax liability by April 15 even when you extend your tax filing deadline until October. A tax extension extends your time to file your tax return, but it does not extend your time to pay your tax bill. Therefore, you should estimate the amount of tax you owe for the year. You can estimate your tax amount by using tax tables provided by the IRS or other tax calculator software. TurboTax offers a tax calculator called TaxCaster. Click here for a link to the TurboTax software package. After estimating the total taxes you owe for the year, subtract out your withholding taxes and estimated tax payments during the year. Additionally, if you know you can claim a tax credit(s) at the time of extending, you should reduce your tax liability by the amount of the tax credit. Click here for a complete list of tax credits for individuals.

After estimating your tax liability and subtracting withheld taxes, estimated tax payments, and tax credits, you should have an estimated remaining tax balance. If you overpaid tax during the year or do not owe additional tax, you should simply file the Form 4868 tax extension. If you owe additional tax based on your tax estimation, you should include an additional estimated tax payment when requesting your tax extension. You can do this via debit card, credit card, or check. It is important to pay any additional tax you may owe when filing your extension in order to avoid any interest or penalties.

Filing a Tax Extension - Step 2: Complete Form 4868

The Form 4868 is a simple informational form. By completing the one-page Form 4868, you can extend your tax filing day until October 15. The Form 4868 is a two part tax form.

Part 1: Identification - Part One, or the identification portion of the Form 4868, includes your name, address, and social security number.

Part 2: Individual Income Tax - Part two, or the Individual Income tax portion of the Form 4868, includes information related to your tax liability and tax payments. In Line 4, you enter your tax liability for the tax year. This amount represents your total taxes owed for the year. In Line 5, you enter your tax payments during the tax year. This amount relates to tax payments and/or tax withheld from your paycheck.  Line 6 is the difference between Line 4 and Line 5, which is the amount of tax you still owe. Lastly, Line 7 relates to any additional amount you plan to pay with your extension. It is important to pay a tax balance due when filing your extension to avoid interest and penalties.

Filing a Tax Extension - Step 3: Submit Form 4868 to the IRS

You can submit your Form 4868 tax extension online or by mail. You can submit the tax extension electronically through IRS e-file. If you choose not to file electronically, you may instead mail the Form 4868 to the IRS. In both cases, you must submit/send the Form 4868 by the original due date of the tax return.