The following guest post from FileLater’s CEO Ryan Thompson helps answer the most common questions about filing a tax extension. I know all readers of this blog are way ahead on their tax prep this year, but maybe you have a friend who can benefit from the info!
Does the IRS need a reason for my tax extension?
No! An IRS tax extension is “automatic” which means that your extension will automatically be approved as long as you file correctly and on time.
What are the deadlines associated with a tax extension?
A personal tax extension will grant you six more months, giving you a new tax deadline of October 15th. Most businesses that file for an extension will have a new tax deadline of September 15th. Tax extensions must be submitted by your original tax deadline, which is April 15th for individuals and most businesses (including LLCs, partnerships and sole proprietors), and March 15th for corporations.
Do my chances of audit go up if I file a tax extension?
The IRS never tells us what triggers audit; however, the fact that the IRS makes tax extensions possible, and that you are showing compliance by filing for an extension leads many CPAs and tax professionals to believe that your chance of audit may actually decrease if you file for a tax extension
How do I file an extension?
There are three ways to file for a tax extension. You can fill out and send in the IRS forms (IRS 4868 for individuals and IRS 7004 for businesses), have your CPA file an extension, or do it yourself online with an authorized IRS e-file provider like FileLater
What information is needed to file for a tax extension?
Luckily, the IRS doesn’t ask for any complicated tax information when you file for a tax extension. Some personal information is needed, such as name, address, and social security number, and you’ll also have to estimate if you’ll owe or get a tax return when you file your extended taxes. But, you won’t need any information from W2s, 1099s, 1098s, etc.
Does a tax extension give me more time to pay any taxes due?
A tax extension is an extension in time to file your tax extension, not an extension of time to pay. The IRS asks that you still pay any tax balance on time. However, filing a tax extension will eliminate the stiffest late penalty, which is called the late filing penalty, and is 5% of any balance due per month.
Why should I e-file my extension?
E-file is the only method to file a tax extension where you’ll get an IRS confirmation when your tax extension is approved.
Do I also need to file for a state tax extension?
Each state has their own rules for state tax extensions. However, many states will automatically grant you a six month tax extension as long as your IRS federal tax extension is approved. FileLater provides instructions and forms where needed for all 50 states: http://www.filelater.com/states.html
How many extensions are filed annually?
10 million personal extensions and 5 million business tax extensions are filed annually with the IRS, and is expected to grow by about 5% in 2009 with more complicated tax situations for many filers given the current economic environment.
What are the benefits of using FileLater?
FileLater is an authorized IRS e-file provider, which means that you’ll get an IRS confirmation when your extension is approved, and has over 98% of submitted tax extensions approved by the IRS! FileLater is also the only extension service on the web that can e-file business tax extensions, and is a BBB accredited business.
Ryan Thompson is co-founder and CEO of FileLater. After 3 years with Intuit’s TurboTax, FileLater was established to provide the 15 million businesses and individuals who file tax extensions annually with the easiest way to get a tax extension online. FileLater is an authorized IRS e-file provider, and the only place on the web to e-file business tax extensions online.
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