An extension provides you with an extra 6 months to file your personal income tax returns. It’s pretty much automatic — all it takes is sending a very, very short form to the IRS (which I can e-file for you) that says you’re electing to extend the due date to Oct 15th. That’s it. Done.
Now, many people have a hard time believing this is true, presumably because the media really loves to whip up the April 15th frenzy. But honestly, there is absolutely no need to rush to get things done by April 15th! It’s unnecessary stress. The real deadline is Oct 15th, as long as you’ve taken the step of sending in the extension form.
So, are you “on time” if you’ve filed an extension by April 15th and you send in your return by…
- May 15th? Yes!
- June 27th? Yes!
- August 9th? Yes!
- September 3rd? Yes!
- October 20th? No!
Now, there is one caveat: if you owe tax (that is, if you’re not due a refund), and you send in payment after April 15th, then there is a late payment (plus interest) fee that will be assessed by the IRS. Currently, this fee is in the 0.25% – 0.75% per month range, depending on how much you owe and how late your payment is. (For Oregon, it can be a bit higher.) As long as you don’t owe a lot in taxes, this fee is totally reasonable in exchange for the extra time that the extension buys you.
For example (assuming you’ve filed an extension by April 15th):
- If (as of April 15th) you’re due a refund, then you can file your return anytime after April 15th and the late payment fee will be $0. Maybe that’s obvious, but the IRS doesn’t assess a late payment fee if you’ve already paid more than you owe by April 15th.
- If you file your return on June 15th, and you owe $2,000 in taxes to the IRS, then the late payment fee should be somewhere in the $10-$30 range.
- If you owe $10,000 in taxes to the IRS, and you wait until the very last minute to file and pay (October 15th), then the late payment fee should be somewhere in the $150-$450 range.
- You do have the option to send in payment along with your extension, which can put a big dent in the late payment-fee. So, in that last example, if you made a $5,000 payment to the IRS by April 15th, then you’d cut the late payment fee at least by half, possibly more. (It’s not necessarily linear.) If you made a $10,000 payment to the IRS by April 15th, then the late payment fee would disappear completely; you’d have up to October 15th to file your return, at no additional cost.
There are a few different ways to file an extension:
- You can have me e-file it for you. It takes me at most 5 minutes, and I generally don’t charge anything for this because you’re helping me out as well. Less that I need to get done by April 15th!
- You can mail in an extension request using IRS Form 4868 (see here). Enclose a check, if making a tax payment with your extension.
- You can make a payment directly from your bank account using IRS Direct Pay (see here – choose “4868” in the “Apply Payment To” box). You don’t need to send in a Form 4868 if you use this method.
- Similarly, no 4868 is required if you submit a credit- or debit-card payment, and indicate it as an extension payment. See, for example, www.pay1040.com.
- Oregon recognizes the federal extension, so you don’t need to file an extension with Oregon if you’re filing one with the IRS. If you need to make an extension payment to Oregon, use Form 40-V (here) and check the “Extension” box.