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The deadline for filing income tax returns is fast approaching (April 18, 2023), and many taxpayers may be considering filing a tax extension. Doing so will give you extra time to gather financial information and avoid a late filing penalty. Here’s what you need to know. 

Filing for Federal Tax Extensions in 2023

If you can’t file federal taxes by the deadline, you must complete IRS Form 4868 to file for a tax extension, which gives you six additional months to file your federal tax return. Form 4868 contains two parts. In part one, you provide the following information: 

  • Name 
  • Address
  • Social Security Number
  • Spouse’s Social Security Number, if applicable

In part 2 of Form 4868, you must estimate your final taxes. You can determine this amount by subtracting your total tax payments for the year. 

You can request a federal tax extension by mail or online – you have until October 16, 2023, to file your return. You must (1) file your tax extension no later than the due date of your tax return and (2) estimate and pay any owed taxes to avoid penalties – you do not receive a payment deadline extension.

If you file for a tax extension online, you can submit your payment electronically on the IRS website. You can also send your payment with your completed Form 4868 if you file by mail.

State Tax Extensions

In addition to a federal tax extension, you may also qualify for a state tax extension. Doing so also gives you a six-month extension. Depending on your state, you may need to complete a form before your tax return’s due date. In any event, requesting a state tax extension does not extend the payment due date. 

Different states have requirements to file state tax extensions. Some states recognize federal extensions and automatically grant state tax extensions, provided that you include Form 4868 with your request form. Other states only allow an extension if you (1) have no tax due and (2) file for a federal extension. 

In most states, you can file an extension request and pay any taxes owed by mail or online. To understand the applicable rules in your state, talk to a CPA who regularly prepares income tax returns. 

Is There a Penalty for Filing a Tax Extension?

If you need a tax extension, you must file on or before the April 18 filing deadline to avoid a late-filing penalty from the IRS. After you file for an extension, you will not be penalized if you pay any taxes owed by the federal and state deadlines. However, you will face a late payment penalty if you fail to pay or underpay.

The Bottom Line

You still have time to file for a federal or state tax extension, but the tax filing deadline is only weeks away. Filing for an extension will give you several months to file your return but no additional time to pay your taxes. Contact an experienced tax professional today to get started.