Taxation & Estate Planning

IRS Extensions - What do I need to do to file an IRS Extension?

By Darrin Mish

If you are unable to file your taxes on time or pay your taxes on time, you will add to your IRS Problems.  You may be able to file for an extension for either of these circumstances if you can prove the need. 

Types of Extensions

You have the option of requesting an extension to file or an extension to pay.

To request an extension to file you will use Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return).  This needs to be postmarked to the IRS by April 15.  I strongly recommend using U.S. Certified Mail, Return Receipt Requested. This form changes yearly.  To obtain a current form visit the IRS’s website, www.irs.gov, or call the IRS for a copy.  This extension is granted automatically.  You will not receive a notice of approval from the IRS.  This extension will allow you to file your tax return by August 15.  You will not have to pay failure to file penalties. 

Requesting an extension to file does not mean you do not have to pay your taxes by April 15.  You should include payment with your extension request.  If you do not pay or only pay part of your taxes, you will be assessed both penalties and interest for the amount still due. 

To request an extension to pay use Form 1127 (Application for Extension of Time for Payment of Tax).  This extension is not automatic.  The majority of these requests are denied because of lack of proof of need.  You will have to demonstrate that you did everything you could to be prepared to pay your taxes but circumstances beyond your control hindered you from being able to pay on time.  For the IRS to consider your request you must:

•    Provide a complete statement of all your assets and liabilities at the end of last month
•    Provide an itemized list of money you received and spent for 3 months before you requested the extension
•    Show undue hardship if you pay your taxes on time
•    Provide security for the unpaid tax

If an extension to pay is granted, you may get up to six more months to pay your taxes without penalties being assessed.  However, interest will still accrue.  Another advantage of this extension is that the IRS cannot use enforcement action during this period as long as you pay the tax on time. 

To find out more information regarding extensions, contact our office.  Our knowledgeable staff can help you with your extension request or other IRS Problems that you have encountered.  Contact us today tollfree at (888) 438-6474.
 

Full post as published by IRS Problem Solver Blog on April 10, 2008 (boomark / email).