Tax Tips & Calculators

Why file an extension?

Without a valid extension, a late-filed return is subject to a 5% per month penalty on any unpaid balance. The combined penalties for late-filing and late-payment can be as much as 47.5% (see below) of the unpaid tax. Even if you expect a refund, filing an extension protects your right to make some elections that otherwise have to be made by the due date of the return. One example is the right to recharacterize an IRA contribution. File Form 4868 to automatically extend your filing deadline 6 months to Oct. 15.

Payment Required

An extension of time to file is not an extension of time to pay. When you file your extension request, estimate any balance due and pay as much of it as you can. If you file an extension and have paid at least 90% of the tax by April 15, the late-payment penalty does not apply. Interest will be charged on any unpaid balance.

If you don't file your return by Oct. 15, both the late-filing and late-payment penalties apply. If both penalties apply, a penalty of up to 25% of the balance due will be charged in the first 5 months. The 0.5% failure to pay penalty will continue to apply for up to 45 more months. Note: Interest on the unpaid balance and accrued penalty will continue to be charged until the balance due is paid.

Individuals Outside the U.S.

If you reside outside of the U.S. on April 15, you have an automatic 2-month extension until June 15 to file. You don't need to request this extension or submit any forms. If you need more time than this, file Form 4868 by June 15 to get an additional 4-month extension to Oct. 15. Note: You are not entitled to the automatic 2-month extension if you are merely taking a vacation or are on a business trip outside of the U.S.

Foreign Earned Income Exclusion

If you expect to be eligible to exclude your foreign earned income, but won't meet the requirements until after the normal due date of your return, you can file Form 2350 to request an extension until 30 days after you first meet the requirements. As with other extensions, the extension to file is not an extension to pay.