Tax season can feel like a whirlwind, especially if you’re a small business owner juggling receipts, invoices, and tax forms while managing your day-to-day operations.
But here’s some good news: if you’re feeling overwhelmed, you have the option to extend your tax return. This blog will walk you through the basics of extending both your federal and state tax returns so you can take a breather while staying compliant with tax laws.
What Does Extending Your Tax Return Mean?
Extending your tax return simply gives you more time to file your tax paperwork. Instead of the typical April 15 deadline (or the next business day if it falls on a weekend or holiday), filing an extension allows you up to six additional months to submit your federal return. For 2024, that means your new deadline would be October 15.
Important to note: An extension gives you more time to file, but not more time to pay any taxes owed. To avoid penalties, you’ll need to estimate and pay your taxes by the original due date.
How to Extend Your Federal Tax Return
Filing an extension with the IRS is straightforward:
- File Form 4868
Complete IRS Form 4868, the Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You can file this electronically or by mail. - Pay Your Estimated Taxes
Use IRS Direct Pay or other electronic payment options to submit your estimated taxes. If you’re mailing Form 4868, include a check or money order for your estimated payment. - Get Confirmation
If you file electronically, you’ll receive an acknowledgment from the IRS. Keep this for your records.
Extending Your State Tax Return
State tax extension rules vary widely. Some states automatically grant an extension if you file a federal extension, while others require a separate state-specific form. Here are a few general tips:
- Check Your State’s Requirements
Visit your state’s Department of Revenue website to learn about their extension process and deadlines. - File the State Extension Form (if needed)
Many states offer an online filing option or a downloadable form. For example, California uses Form FTB 3519, while Indiana accepts Form IT-9. - Pay State Taxes Due
Just like with federal taxes, you’ll need to pay any taxes owed by the original filing deadline to avoid penalties and interest.
State Extension Quick Reference Guide
| State | Accepts Federal Extension? | State Extension Form | Can be E-filed? | Additional Information |
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If you need to extend a return, taxing agencies may waive certain penalties if the taxpayer has met certain payment and filing criteria. The table below summarizes what each state requires to extend the return and avoid penalties. Use the search field to search the table data.
Extension requests only extend the time to file. They don’t extend the time to pay (unless otherwise noted). States that grant automatic extensions only do so if you meet payment requirements and there’s no balance due. Review the state form instructions for more detail.
Common Questions About Tax Extensions
Does filing an extension increase my chances of an audit?
Nope! The IRS does not penalize or flag extensions. In fact, filing an extension can help you avoid mistakes and ensure you’re filing accurately.
What if I can’t pay my taxes by the original deadline?
Even if you can’t pay your full tax bill, file an extension and pay as much as you can. This helps minimize late-payment penalties. You can also explore payment plans with the IRS or your state.
Can I extend my business tax return too?
Yes! Partnerships, S-corporations, and corporations can also file for extensions using their respective forms, such as Form 7004 for businesses.
Why Filing an Extension Could Be a Smart Move
Filing an extension can:
- Give you more time to gather and review documents, reducing the risk of errors.
- Help you take advantage of deductions or credits you might have missed in a rush to file.
- Allow you to work with a tax professional during their less busy season, ensuring you get the attention your return deserves.
Final Thoughts
Extending your tax return can be a lifesaver when life gets hectic, but it’s essential to follow the rules and meet the extended deadlines. If you’re feeling unsure about how to estimate your taxes or file the necessary forms, working with a CPA can take the stress out of the process.
