With so many tax provisions tweaked in 2020—from the CARES Act in March to the Consolidated Appropriation Act in December—some taxpayers may find it challenging to get everything together in time to file their taxes by the April 15, 2021 deadline. In these situations, taxpayers may be able to request an extension, providing them with an extra six months to complete their tax return.
Read on to learn more about when and how you can file for an extension of time to complete your federal income tax return.
When Do You Need an Extension?
In 2021, tax season (or the date when the IRS can begin processing returns) begins on February 12. But while employers are required to send out all W-2s by January 31, other tax forms may take longer to arrive.
If you have your taxes prepared by a professional, you may sometimes find it hard to gain a spot on their calendar before March or April. In these situations, it often makes sense to request an extension so that you won't be penalized if your tax return is filed a few days (or even a few months) late.
An extension request can also keep you from having to amend your return if you discover a mistake. It is generally better to make sure you do your taxes right the first time than to have to fix a return you rushed through.
It's important to note that receiving an extension on filing your return doesn't mean you have an extension on when your taxes are due. In other words, if you're expecting to owe a tax bill, you'll still be assessed interest (and, in some cases, an underpayment penalty) if you don't make this payment by April 15. But if you wind up owing less in taxes than you paid by April 15, you'll receive a refund as soon as your return is processed.
How Can You File for an Extension?
The IRS has a variety of extension forms on its website, listed by filing status. Even if your income is normally too high for you to use the Free File option to actually file your taxes, all taxpayers can use the Free File form to request an extension. There is no need to pay someone to file an extension on your behalf. Any extension should be requested by April 15, 2021.
As an alternative to requesting an extension with Free File, you can also opt to file an extension request when you make an estimated tax payment. Whether you use the Direct Pay system, the Electronic Federal Tax Payment System, or pay with a credit or debit card directly on the IRS's website, you'll be able to make a payment and request an extension in one seamless transaction.
If you're not sure you can file your federal income taxes before the deadline, you have options. By filing an extension, you'll have more time to complete your tax return without worrying about paying the penalties associated with late filing.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.