Can I get an extension for my income taxes?

Your U.S. individual income tax return for 1998 is due on April 15th, but you can get a four-month extension (to August 15th) for filing. If you want an automatic extension, you must submit IRS form 4868 on or before April 15th.

It is important to note that this is an extension to file and NOT an extension to pay. You must estimate the taxes you owe and send payment with the extension form (if any are owing). Failure to properly estimate and pay taxes may void your extension. Any taxes that are due when you actually file at a later date can result in penalties and interest.

Since the IRS can retroactively deny your extension, various elections that must be made before the return filing date can be disallowed. An example would be a SEP contribution for a self-employed individual.

If you think that you owe taxes, either file your return on time or be sure that you submit a reasonable payment with the extension. If you overpay, you can get a refund or apply it to next year’s taxes.

The current IRS penalty for "failure to file" a return is 5 percent per month of the amount due (maximum of 25 percent) plus interest. The "failure to pay" penalty is 0.5 percent per month, plus interest. In other words, if you submit an "automatic extension to file" which is later denied because of an unreasonable estimate of taxes due or failure pay your taxes, you could be assessed BOTH penalties retroactive to April 15th.

Another point to consider is that by delaying filing, you have extended the time period (statute of limitations) that the IRS has to audit your return.

Many people obtain extensions each year without problems and temporarily reduce their stress levels. Don’t ask for an extension if you really don’t need one, or if you are trying to use an extension as a way to delay paying your taxes.