Tax Extension Period

A filing extension is a grace period granted to both individual taxpayers and businesses that are unable to file tax returns on or before the due date. To apply for an extension, taxpayers can complete and file IRS Form 4868 by the regular date of the return for a six-month extension period.

Taxpayers that cannot meet up with filing tax returns on the due date for different reasons such as not getting all their documents on time or don’t have enough time to complete their taxes on time. Whatever the case may be, provision is made by the Internal Revenue Service (IRS) to cover taxpayers that seek an extension. Once you apply for an extension, you’ll automatically have six months beyond the original filing date to file your tax returns. Tax returns are usually due on April 15, filing for tax extension period means that the new day for filing your tax returns will be October 15.

How can I request an extension?

To request an extension, you must submit your IRS Tax Form 4868 before April 15 (or July 15 in 2020). Form 4868 can be submitted either electronically by e-filing or paper form by mail. While the extension period is automatically six-months from the original due date, if you intend filing earlier than the six-months, simply file your returns at any time within the six months period.

It is important to note that when submitting your extension request, be sure to include the payment for any taxes due by the original tax due date in avoidance of interests or penalties. In addition, an extension may give you extra time to file your return but it doesn’t give you any additional time to pay taxes you may owe on that return.

Most extension requests happen automatically once the application has been submitted. Usually, you will not need to explain the reason for the extension to the IRS. However, ensure that all the details you enter are correct, as errors or wrong information van trigger rejection. In a few cases, especially for members of the military service serving abroad, automatic extensions are granted without having to apply or File Form 4868.

Advantages and Disadvantages of Tax Extensions?

There are different reasons to which many people file tax extensions. If you can avoid it, do so, if not you can go ahead with it, all the same. There are both pros and cons of applying for a tax extension.

Pros

• It gives you extra time to file your returns
• It gives you extra time to gather all necessary documents that may have been delayed for one reason or the other.
• It helps reduce late penalties associated with tax returns.
• It preserves tax refund
• Reduces tax preparation fees

Cons

• It doesn’t provide any extra time to fund an IRA
• It doesn’t address all tax dilemmas
• Professional traders must make the mark-to-market election by the original due date (April 15).
• Difficulty in recharacterizing an IRA contribution