Filing Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return provides U.S. taxpayers additional time to file their federal income tax return if they are unable to file the tax return by the tax filing deadline (April 17, 2018 Tax Day). This form provides an extension of six months, until October 15, to file the required tax return.

Form 4868 may be filed to obtain additional time to file Form 1040, 1040A, 1040EZ, 1040NR, 1040NR-EZ, 1040-PR, or 1040-SS.

Form 4868 MUST be filed by the 2018 tax filing deadline, i.e. April 17 (2018) in order to obtain this time extension, so if you need an extension of time, act soon. However, keep in mind that, Form 4868 simply provides an additional six months’ time to file the U.S. income tax return.  Any tax amount due should still be paid by the tax deadline to avoid penalties and interests.

If you reside out of the United States you will qualify for an additional two months (to June 15) to file your return and pay your taxes without the need to request an extension.  You will be charged interest for any late payment of taxes due, however, no penalties will be charged.

The following is a brief overview on how to file U.S. tax Form 4868 to avail the six-month extension to file the U.S. income tax return.

Filing Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return

Why File Form 4868?

The IRS levies a 5% late-filing penalty for each month a tax return is late until the tax return is filed. This 5% penalty is calculated on the unpaid taxes owing. However, filing Form 4868 for extension can help reduce or eliminate interest and late-payment penalties that apply to payments made after the tax filing deadline (Tax Day, April 17 2018).  To avoid late payment penalties, however, the taxpayer must pay at least 90% of the taxes owing with the extension request.  The current interest rate is 3% per year, compounded daily, and the late-payment penalty is normally 0.5% per month.

In addition, if the tax return is more than 60 days late, the minimum penalty is $135 or the balance due, whichever is smaller.

Plus, you don’t have to give a reason for requesting an extension, which is required if the request for additional time is made after the extension filing deadline.

Before Proceeding with Filing for Extension

As mentioned above, filing Form 4868 provides only an extension of time to file the U.S. income tax return, not an extension of time to pay the tax bill. Therefore, you should estimate your tax liability for the year, deduct taxes paid in the form of tax withholding or quarterly tax payment, and pay the remaining tax bill to the IRS when requesting the extension. You could check the taxes withheld from your pay on the W-2 Form, and income tax liability from 2016’s filed tax return. If there is not much change in the income level and tax credits and deductions, your tax liability for 2017 should be similar.

How To File Form 4868 for Extension

Filing Form 4868 for an automatic extension of time is fairly simple, and requires very basic information, such as the taxpayer’s name, address, Social Security number (SSN), and any remaining tax due. Taxpayers can e-pay what they owe using the Electronic Federal Tax Payment System (EFTPS), by electronic funds withdrawal or with a credit or debit card.  Those who choose to pay by check or money order should make the payment out to the “United States Treasury” and mail it with a copy of the extension request.

U.S. taxpayers residing abroad or unsure about how to make a tax filing extension request, may reach out to a paid tax preparer, using tax-preparation software or by filing a paper Form 4868, available on the website at IRS.gov.

Taxpayers Who Do Not Need To File Form 4868 To Request Time Extension

U.S. citizens and resident taxpayers, who reside abroad, as well as members of the military on duty outside the U.S. are automatically provided an extension until June 17 to file. However, keep in mind that the tax payments are still due by the April 15 (April 17, 2018) tax deadline.   You may file the Form 4868 requesting extension until October 15 on or before June 15, if you still require more time.

Members of the military and others in combat zone localities can wait for a period of 180 days after they leave the combat zone to file returns and pay their taxes due.

People affected by certain tornadoes, severe storms, floods and other recent natural disasters are also granted automatic extension of time to file their federal tax return.

If you are not sure about your remaining tax liability or how to go about filing a Form 4868, it is best practice to reach out to a U.S. tax practitioner to file your tax return and request for additional time to file the tax return. Remember, you have only until the 17th of April to file Form 4868.

 

AG TAX LLP CAN HELP

If you have any tax-related queries, need assistance with tax planning or filing your tax returns please contact us. Our team comprises of highly experienced tax professionals with extensive knowledge of US and Canadian tax laws as well as cross-border compliance.

Furthermore, as a full service accounting firm, AG Tax assures complete assistance with even your most complex tax needs.

We can assist with:

  • Canadian Personal and corporate tax returns
  • Cross Border Taxation and Business Planning
  • US Personal and Corporate Taxation
  • Disclosure of Foreign Assets and other information filings
  • Retirement planning
  • Estate Planning, Inheritance tax advice

To obtain a quote or to arrange for a tax consultation to discuss your US Canada cross border tax  queries, please contact us at:

  • 604-538-8735 (Greater Vancouver Area, BC)
  • 780-702-2732 (Greater Edmonton Area, AB)

 

Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.