The filing deadline for federal taxes this year is April 18. That's exactly one month from now.
If you don't think you'll be able to file your return by then, it may have crossed your mind to seek an extension.
In this post, we will address some frequently asked questions about getting an extension of the time to file federal taxes.
What are the requirements for getting an extension?
Individual income taxpayers have the right to an automatic six-month extension. You don't have to give the IRS a reason why you're asking for it. All you have to do is file Form 4868 before the filing deadline.
That date is April 18, 2016 for most taxpayers. In Massachusetts and Maine, it is April 19. And there are special rules that apply for taxpayers living overseas or serving in the military outside of the United States.
How long does an extension last?
An extension generally last for six months. There is a possible exception if you live outside the country.
Does an extension protect you from tax penalties?
Getting an extension of the time to file your taxes doesn't mean you get an extension of the time to pay them. There are actually two separate penalties: failure to file and failure to pay. An extension can protect you from the failure to file penalty, but not failure to pay.
Besides avoiding a late-filing penalty, are there any other advantages to an extension?
Yes. Getting an extension preserves your ability to apply for an online payment plan with the IRS. Individuals who owe $50,000 or less and businesses that owe $25,000 or less can apply for such plans - if all required tax forms have been filed.
Is there such a thing as extension of time to pay?
Yes. The applicable form is Form 1127, Application for Extension of Time for Payment of Tax Due to Undue Hardship.
What about an extension for foreign income or account reporting requirements?
It is important to distinguish between two different filing requirements. One is Form 8938, Statement of Specified Foreign Financial Assets. The other is FinCEN Form 114, which is still widely known as the FBAR. We will discuss this in more detail in an upcoming post.