The clocks have changed, the days are getting longer, and spring has arrived. in short, Official tax filing deadline April 18, 2023, is at hand. However, getting your taxes done on time can leave you completely stressed and overwhelmed.
If you need to sort out your finances, or if your plans to file on time are sidetracked by unforeseen circumstances, you can still ask the IRS for a six-month filing extension.
Here’s what you need to know when applying for a 2022 tax extension.
You must complete Federal Extension Form 4868.
Must be completed to move the tax filing deadline to October 15, 2023. IRS Form 4868The form must be completed by April 18, 2023. You must pay the IRS dues by this April deadline. Extension does not mean that you can also delay what you need to pay.
Applying for a tax extension gives you an additional 6 months to file your federal taxes. This is an extension for filing returns. Not an extension to pay your taxes.
You can complete the paper form and mail it to the appropriate IRS location (varies by state), or you can file it electronically using the IRS’s online entry form or tax software such as: turbo tax, Free Tax USA, tax law, tax slayeragain H&R Block.
The form pictured above is deceptively complex. With only 9 fields, it looks like it will only take a few minutes to complete. First, enter your name, address, and social security number.
Then go to field 4. Now you need to estimate your total tax liability for 2022. Most people who know how much tax they owe don’t need to apply for an extension.
Estimating your tax burden is the most difficult part of applying for an extension. If you’re looking for guidance on how to estimate your tax liability, the IRS doesn’t have it. The IRS directs filers to “use available information to properly estimate their tax liability.”
When estimating your tax burden, you want to be as accurate as possible. Certain tax software companies that allow you to file extensions electronically have built-in calculators to help you estimate your taxes.
Tax Tips: of turbo tax calculator A particularly useful tool that works for most filers looking to expand.
If you’re really struggling with estimating your income, we recommend spending a few hours using the best tax software to get a more complete estimate of your business or rental income.
The remaining fields include the total amount of federal taxes paid for 2022, the outstanding balance (if more taxes are due), and the amount to be paid when you apply for an extension.
File your state tax extension
If you live in a state that requires state income tax, you may need to apply for an extension in that state. The process for requesting an extension varies by state. In some states, extensions of 6-7 months are automatically granted when the IRS grants an extension.
Other states must use that process to request an extension. When you use your tax software to apply for a federal extension, you will also see the option to apply for a state extension.
If you don’t use tax software, you can also use an online search to figure out the process for requesting an extension in your state.
You still have to pay your taxes by April 18th
The file extension is no extension to payment your tax. Any outstanding taxes must be paid at the time the extension is requested. If you can’t pay the full amount, pay as much as possible. Submitting a tax extension does not remove the need to pay the full amount on time.
The late tax interest rate for 2022 ranges from 3% to 6%. If you have the cash to pay off your taxes, get your debts taken care of right away. This will help you avoid paying even more interest over time.
If you significantly underpay your taxes (less than 90% of what you actually owe), you may incur a tax penalty ranging from 5% to 25% of your unpaid tax liability.
Prioritize paying your taxes by April 18, even if you can’t complete your tax return by the original tax deadline.
Do not expect a refund until you submit
If you overpaid your taxes for 2022, you will be refunded. However, submitting a Form 4868 does not guarantee that refund will be issued.
You will not see your refund check until you have completed the actual tax return. Expect a small interest on the cash held by the IRS, but make sure you get your taxes refunded once the IRS gets your money back.