Taxes 2022: How to Obtain an IRS Filing Extension

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Because of the COVID-19 pandemic, the IRS has extended the tax filing deadline twice in the last two years, giving Americans more time to complete their returns. Tax Day returns to its regularly scheduled deadline this year, with returns due April 18.

 

The good news is…

Filing for an extension is simple and quick for those who require more time. It will also give you until October 17, 2022 to file your tax return with the IRS.

According to the most recent IRS statistics, Americans are already falling behind in the current tax season. According to the IRS, approximately 91 million people had filed their returns as of April 1, down from 93 million filers at the same time last year, when taxpayers had an extra month to get their taxes to the IRS.

 

IRS

 

How much tax do I owe? The following are the income brackets for 2022.

Taxes in 2022: What you can do to avoid an IRS audit of your taxes
In an average year, Americans file approximately 160 million tax returns, which means that approximately 70 million must still file before the April 18 deadline.

“People have a tendency to wait until the last minute,” said Eric Bronnenkant, Betterment’s head of tax. “You can get an extension for six months or so, but one of the most important things to understand about filing for an extension is that it is not a payment extension.”

In other words, even if you get an extension until October, if you owe the IRS this year, you must still pay Uncle Sam by the end of April 18. Here’s what you need to know about obtaining an IRS extension.

 

What is the filing deadline for this year?

The tax filing deadline is typically April 15, but this year taxpayers have until April 18 to file because April 15 falls on Emancipation Day, which is observed as a holiday in Washington, D.C. As a result, the IRS will be closed on April 15.

Residents of Maine and Massachusetts have an extra day to file — until April 19 — because April 18 is Patriots Day in those states.

Taxpayers who receive an extension will have until October 17 to file their returns. Normally, people have until October 15 to file their forms, but because that date falls on a Saturday, taxpayers have until the next business day, October 17, to file.

 

How do I apply for a tax extension?

First, you must request an extension by April 18 or face a “failure to file” penalty, according to the IRS. (For more information on that penalty, see the section below.)

Form 4868 must be completed in order to request an extension. This is a one-page form in which you must provide basic information such as your name, address, and Social Security number. It also asks you to estimate how much tax you owe.

 

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This form is also available through the IRS’s Free File service, and it can be used regardless of income. Typically, only people with an adjusted gross income of less than $73,000 can use the Free File service, but anyone can use it to request an extension, according to the IRS.

 

What? Do I still have to pay the IRS?

That’s right: obtaining an extension to file your tax return does not entitle you to an extension to pay what you owe the government.

According to Betterment’s Bronnenkant, the IRS expects people to make an effort to pay what they owe. That may be difficult for people who haven’t yet filed their tax returns, but it’s best to make an educated guess.

“If your previous year is a good barometer for your current year, start there to come up with some sort of reasonable estimate,” Bronnenkant said. “Perfect should not be the enemy of good enough.”

For example, if you estimate owing $10,000 but end up owing $11,000, you’ll be charged an underpayment penalty. However, facing a $1,000 underpayment penalty rather than the entire $11,000 owed will be less painful, according to Bronnenkant.

 

What if the IRS owes me money?

If the IRS owes you money, you’ll have to wait until the IRS processes your tax return before receiving a refund. So, if you wait until October 17 to file, you won’t get your refund for another three weeks, based on the IRS’ estimate that most taxpayers receive their refund within 21 days of filing.

According to the most recent IRS data, the average refund this year is more than $3,200.

Of course, if you believe the IRS owes you money, you are not required to send a check to the IRS by April 18. However, you must be certain that your assessment is correct, or you will face penalties for failing to pay your IRS debt.

 

What are the consequences of failing to file?

If you are unable to complete your tax return by April 18, it is best to file for an extension because the failure-to-file penalty is severe. It is calculated based on the amount of unpaid taxes as of the due date as well as the lateness of a tax return.

The penalty rate is 5% of unpaid taxes for each month a filing is late, with a maximum penalty of 25%. Consider a taxpayer who owes $10,000 but does not file for an extension; if they file two months late, they will be penalised $500 per month, for a total of $1,000.

 

What are the consequences if I do not pay enough?

The failure-to-pay penalty is less severe than the failure-to-file penalty. Each month, the IRS charges 0.5 percent of the unpaid taxes, with a maximum charge of 25% of the unpaid taxes.

Consider someone who pays an estimated tax of $10,000 by April 18, but it turns out they owe $11,000 instead. They’ll have to pay a 0.5 percent penalty on the additional $1,000 they owe the IRS. They would owe $10 if they filed in June, two months after the tax deadline.

 

Is it necessary for me to file an extension with my state?

That is conditional. Once you’ve requested an extension from the federal government, determine whether you’ll need to do the same for your state. “State filing and payment deadlines vary and are not always the same as the Federal filing and payment deadline,” according to the IRS.

If you receive a federal extension, some states will automatically extend your state taxes. In other states, you must apply for an extension separately. The Federation of Tax Administrators provides instructions on how to look up tax information for the state in which you live.

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If you live in one of the nine states that do not have a personal income tax, you are likely exempt. However, two of those states, New Hampshire and Tennessee, continue to tax investment income, so if you earn money from dividends, stock sales, or other investments, you may still be required to file a state tax return in those states.

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