How to Extend Tax Return Last Minute

If you can’t file a tax return by April 17, 2018, you want to extend your tax return.

That extension gives you more time to file your return without penalties.

And that’s important. The penalty for not filing or extending a tax return by April 17, 2018 equals 5% of the tax you will owe on April 17, 2018.

For example, if you owe $10,000 in income taxes for 2017 and you don’t file or extend by April 17, the IRS penalty levied on April 18, 2018 equals $500. (That 5% per month penalty continues for another four months, too.)

You can extend a tax return in a variety of ways.

1.    The Easiest Way is to use the IRS’s Direct Pay tool. This method works if you owe a payment. https://directpay.irs.gov/directpay/payment?execution=e1s1

Indicate you want to make a payment so you can extend the due date for a 1040 return. Also indicate you’re making the extension payment for 2017.

After confirming your identity, you will be asked for your bank information. Once you submit the payment, your extension is considered filed.

2.  The Paper Method buys you more time to gather money in the bank account.

Extend using a paper 4868 form: https://www.irs.gov/pub/irs-pdf/f4868.pdf

Fill in the form with your name and social security as well as your spouse’s name and social security number if you’re married. Attach a check or money order if you think you owe taxes.

Then mail the form to the IRS processing center for your location. (The form instructions, available with the form via the link just provided, list the IRS processing centers that taxpayers in different states use.)

Tip: Be sure the extension is mailed and postmarked on or before April 17. I strongly recommend using certified mail return receipt especially when you owe a payment with the extension. You’ll also gain a few days for mail and check processing to fund your bank account with sufficient cash.

Tax Return Extension Payment Amount

Extending a tax return gives you more time to file your return. But you are still supposed to pay the taxes you owe by (in 2018) April 17.

The right way to come up with the tax liability you still owe?

1.    Do a ballpark return. Replace with estimates any income or deduction amounts you don’t yet know for certain.

2.    Estimate. You can also, often, guess and get pretty close. If last year you paid, for example, $4,000 with your tax return and your income and deductions this year look like last year’s income and deductions, last year’s payment probably works for this year’s payment.

3.    Pay not what you owe but what you can afford to pay. If you think you owe, say, $10,000 but can only pay $3,000, you pay the $3,000 you can afford. Note: If you don’t pay all of your 2017 tax liability by April 17, 2018, you will get changed what amounts to interest on your underpayment through a complicated formula I won’t detail here but expect to be charged about 1% per month.

“Zero Extension” - Extend Tax Return Without Making a Payment

If you want to extend your tax return but won’t make a payment, you should use the Form 4868 and indicate on that form that you think you owe zero additional tax liability.

If it turns out you owe something and not zero, you will pay interest on the underpayment. But not at that punitive 5% per month rate mentioned earlier.