Filing Your Federal Tax Extension

Federal Tax Extension

What is the federal tax extension ?  The deadline for filing a personal income tax return is normally April 15 of the following year. The tax deadline 2011 would normally be April 15, 2012 but this day falls on a Sunday.

The deadline for filing 2011 personal income tax returns has therefore been pushed back to April 17, 2012. You can extend this deadline by filing a tax extension form with the IRS.

This will allow you to submit your 2011 tax return as late as October 15, 2012 without paying the late-filing penalties the IRS normally charges.

The filing extension applies only to the tax returns, not the taxes themselves. You still need to estimate the taxes you will owe, and pay them by April 17, 2012.

Federal Tax Extension Overview

Many people use software to file their taxes, which typically has the ability to submit the returns electronically through a web service.

Tax software with electronic filing capability usually lets you to file an extension in this manner. You may then pay your estimated taxes electronically with one of the electronic payments methods approved by the IRS.

This is typically a direct payment from your bank account or a credit card payment, which you can make online or over the phone. Modern tax software often allows you to log on to an account, so you can know when the extension has been accepted.

You can also complete IRS Form 4868 by hand. This form is known officially as the Application for Automatic Extension of Time to File U.S. Individual Tax Return.

You will need to include your payment with Form 4868 and make a copy of this form for your records. Mail it to the address for the IRS in your state so that it is postmarked no later than April 17, 2012.

You then have until the October 15, 2012 extension deadline to file your tax return.

Federal Tax Extension and Tax Payments

Filing for a tax extension has specific implications regarding your tax payment. The IRS may disallow your extension if it determines that your tax estimate is unreasonable, and it will charge you a late filing penalty if your tax extension is disallowed. You will also owe interest on any taxes you fail to pay by April 17, 2012.

The standard interest rate on underpayment is 0.5 percent each month if you pay less than 90 percent of your taxes. This interest will continue to accumulate on the unpaid amount until you pay the balance in full.

You will often need to file an extension for your state taxes at the same time as your federal taxes. You can typically do this through your tax software, although the details such as mailing addresses and filing deadlines vary by state. The website for your state tax authority will have this information.

A tax extension works differently for citizens who live outside the United States. These citizens should consult IRS Publication 54, which is entitled Tax Guide for U.S. Citizens and Resident Aliens Abroad. This publication explains the conditions under which you may qualify for special treatment. Qualifying US citizens who live abroad may request an extension with IRS Form 2350, which is entitled Application for Extension of Time to File U.S. Income Tax Return.

You must fill out part of your Form 1040 before you can complete Form 4868. Select the specific Form 1040 you plan to submit by October 15, 2012. Fill out the personal information on the Form 1040, including your name, address and Social Security number. Check the box marked File an Extension in the upper right-hand corner if you are filing the extension electronically.

Part I

The first spaces on the form are for the date range for the tax year, which most people will leave blank. Enter your name and your spouse’s name in line 1 if you are filing a joint return. The names must be in the same order in which they will appear on the Form 1040. Report a name change to the Social Security Administration before you file a Form 4868.

Enter the address to which you want correspondence sent regarding your Form 4868. This can be your mailing addresses or the address of your tax preparer. The address on Form 4868 will not update your records with the IRS. You must notify the IRS of an address change with Form 8822, Change of Address.

Enter the Social Security number on line 2 that will appear first on your Form 1040. Line 3 will contain the Social Security number that will appear second on a joint tax return. Enter your individual taxpayer identification numbers on these lines if you are not a U.S. citizen. Aliens can still file a Form 4868 without an ITIN, although they will need it to file a tax return.

Part II

You may round off dollar amounts to the nearest dollar on Part II of Form 4868. You must do this for all amounts if you decide to use rounding. Drop the cents amount if it is 50 or less, and round the dollar amount up if the cents amount is greater than 50.

Perform all needed calculations before you round off.

Enter the estimate of your total tax liability on line 4 of Form 4868. This will be the amount you expect to enter on one of the following tax forms:

• Form 1040, line 61.
• Form 1040A, line 35.
• Form 1040EZ, line 10.
• Form 1040NR, line 60.
• Form 1040NR-EZ, line 17.
• Form 1040-PR, line 5.
• Form 1040-SS, line 5.

Enter the estimate of your total payments for 2011 on line 5 of Form 4868. This will be the amount you expect to enter on one of the following tax forms:

• Form 1040, line 72.
• Form 1040A, line 41.
• Form 1040EZ, line 9.
• Form 1040NR, line 69.
• Form 1040NR-EZ, line 21.
• Form 1040-PR, line 10.
• Form 1040-SS, line 10.

Subtract line 5 from line 4 and enter this difference on line 6 as the balance due. Enter 0 if line 5 is greater than line 4. Enter the amount you will be paying on line 7.

This amount should be as high as possible if you are not paying the full amount on line 6 in order to avoid late payment penalties.

Check the box on line 8 if you will be outside the United States on April 17, 2012.

Check the box on line 9 if you meet all of the following criteria:

• Filed Form 1040NR or 1040NR-EZ
• Did not receive wages subject to withholding for U.S. income tax
• Return is due on June 15, 2012

Any tax related questions should be directed to your tax professional. However, hopefully this has provided a basic overview of the federal tax extension.