If you are like most Americans, you are required to annually file a federal tax return with the Internal Revenue Service (IRS). Typically, Tax Day falls on or just after March 15th for most businesses and April 15th for Individuals and Proprietorships. But what happens if Tax Day comes and you are not ready to file your return yet? In this case, you will need to request an official tax extension from the IRS.

The tax experts at Clements, Purvis & Stewart work one-on-one with clients every day to help maximize tax deductions and communicate with the IRS on their behalf. In this blog, we will explain what a tax extension is and how it works. We will also explain what you need to do to request a federal tax filing extension, as well as what information the IRS needs to grant you one.

What is an IRS tax extension?

Simply put, a tax extension gives you additional time to file your return. It helps to ensure you have enough time to accurately collect and prepare all of your tax forms.

The deadline to file an extension depends on whether you are filing as a business or as an individual. For example, businesses typically have until March 15th to request an extension; however, if you are an individual taxpayer, you have until April 15th to apply for one.

Once you realize you are going to need more time to complete your taxes, let your tax preparer know right away. They often need a few weeks to accurately calculate an estimate of your tax liability, which you will need to send along with your extension request.

When you file an extension request, you are granted an additional six months to file your taxes.

Is an extension of the filing deadline also an extension of the payment deadline?

One common misconception is that an extension of the filing deadline is also an extension of the payment deadline. That is not the case.

If you owe taxes, filing an extension will not give you additional time to pay them. It’s only an extension of time to prepare and file your forms. Therefore, you still need to make a reasonable estimate of your tax liability, so you can send the correct payment amount to the IRS by the original deadline to avoid getting hit with any penalties.

Why do taxpayers request a filing extension?

There are many reasons why someone might need to request a tax extension from the IRS.

Here are some of the most common reasons why taxpayers might request an extension:

  • Incomplete documentation. You’re waiting to get some additional tax information or some of your forms came in late, so there isn’t enough time for your preparer to carefully analyze all of the information before the typical tax deadline to file your return.
  • Lack of organization. You intend to take tax credits or deductions, but you need additional time to gather receipts and other paperwork to prepare your return
  • Unexpected life events. You’ve experienced a natural disaster or sold your business and need additional time to file taxes.

While these are three common reasons, you do not need a reason to request an extension for your tax return.

Is there a penalty for a tax extension?

Another common question regarding filing a tax extension is about penalties. Our clients want to know if they will incur any penalties if they request an extension of time to file their returns.

There is no penalty for filing an extension. As mentioned, you just need to pay your taxes by the original deadline to avoid getting charged an underpayment penalty by the IRS.

Penalties and interest may accrue if you are late paying your taxes. If you suspect you will owe the IRS money, or if you are self-employed, then you should pay your taxes by the filing deadline (and possibly make estimated tax payments during the year, if needed) to avoid penalties and interest.

When is the tax extension deadline?

An extension gives calendar year-end businesses until September 15th to prepare and file their taxes. Individual taxpayers have until October 15th to file their return.

Does filing an extension increase the odds of being audited by the IRS?

While you might think requesting a tax extension makes you more likely to be audited, that’s actually not the case at all. In fact, many tax experts think getting the extra time to ensure the accuracy of your forms could actually lower your odds of being audited.

Therefore, if you need the extra time to prepare and file your return, you shouldn’t worry that requesting an extension will make you more likely to be audited by the IRS.

What is the process of getting an extension?

Filing for an extension is a fairly simple process. You still need to provide your tax preparer with as much of your tax information as you have. Once you’ve done this, they will prepare a simple form and e-file it for you.

The whole process really is very easy, especially for the taxpayer. In fact, it doesn’t even require your signature.

Does filing a tax extension delay your refund? 

Filing an extension does not speed up or delay the amount of time it takes for you to receive your tax refund. The only time you might see a delay in getting your refund is if you file close to the initial tax deadline, since the IRS typically has a higher volume of returns to process the closer it gets to April 15th.

That’s why tax preparers typically recommend filing for an extension as soon as you know that you are going to need one.

Our Tax Pros Can Help You File a Tax Extension

If you are missing information to file your taxes, or are unable to file by the due date for other reasons, we recommend filing for a tax extension. This is the best way to get the time you need to submit an accurate and complete return.

And remember, an extension does not give individuals extra time to pay taxes. It is essential to pay any taxes owed at the time of the extension to avoid penalties and fees.

Do you need help getting a tax extension? Start working with one of our skilled and dedicated tax professionals to ensure that you don’t make any mistakes.

Clements, Purvis & Stewart’s tax pros can help you file your federal tax return, calculate your tax payments, and get a filing extension if you need one.