Filing a tax extension for your 2018 returns

Key Points

  • The IRS will allow an extra six months to file your tax forms for individuals who ask for an extension. However, any taxes you owe for the 2018 tax year are still due on April 15, 2019.1
  • The methods for applying for an extension are found on IRS Form 4868.2 However, you are still required to estimate and pay your tax bill by the original filing date.
  • Small business owners may get more time to contribute to certain retirement accounts and should verify that time frame with their tax preparer.
  • The deadline to make previous year contributions to your IRA or Roth IRA is the same as the filing deadline, April 15, 2019.

Having trouble finishing your taxes? Maybe you’re still waiting for tax information or are still sorting out your deductions. Whatever the case, by filing for a tax extension the IRS will automatically extend the deadline to file your tax forms by six months. Here’s what you need to know.

Dates to remember

  • Deadline to file 2018 individual income tax returns
  • Deadline to file for an extension (see Form 4868) and pay any taxes owed to the IRS
  • Deadline for 2018 IRA contributions
  • Consider any relevant state tax due dates
  • Special rules apply this year to taxpayers in Maine and Massachusetts1
  • Deadline to file 2018 individual income tax returns (if you filed an extension with the IRS)

You still have to pay taxes owed by April 151

Filing for a tax extension only means you can extend the deadline to submit your tax paperwork. If you owe any taxes, payment is still due by April 15.1 Your estimated payment may be reduced by any amounts already paid through withholding or prior estimated tax payments. By filing an extension and making a large enough payment, you may be able to avoid interest charges as well as any IRS penalties related to late filing or late payment3. The penalties for failure to file a tax return can increase your tax bill the longer you delay, and can approach 25 percent or more.

How to file an individual extension

  • Estimate your tax bill. Do a rough draft of your 1040 tax return or consult with your tax preparer to find out what you will owe in taxes this year. If you find you are actually due a refund, you don’t have to worry about your tax bill.
  • Download and read Form 4868. This form will ask you for your estimated total tax liability and total payments for 2018 to determine the balance due, if any, with your extension.
  • Following the Form 4868 instructions, mail or electronically file the extension form with your payment by the April 15 deadline; instructions for each are included on Form 4868. Your tax return will not be due until Oct. 15.4

Rules for small business owners

  • If you are self-employed and filing for an extension for your personal taxes, you will have until the Oct. 15 deadline to file the paperwork for your individual tax return. However, any taxes you owe are still due on April 15.
  • You may continue to fund your SIMPLE IRA (savings incentive match plan for employees) or individual 401(k) until your tax filing deadline (including extensions) for this year as long as the plan originated in 2018 or before.
  • You may start and contribute to a SEP IRA (simplified employee pension) for the previous year as long as you establish and fund the plan no later than the business’ tax filing deadline, including extensions.
  • Remember that the IRS requires that we code SEP or SIMPLE contributions in the calendar year they are received. An employer may, however, report the contribution for the prior plan year when filing their tax return. For more information on the IRS requirements, please see Instructions for Participant on the back of Form 5498 Line 8 (SEP contributions) or Line 9 (SIMPLE contributions).
  • Remember that individuals cannot make prior year contributions to a traditional and/or Roth IRA past the April 17 deadline.
  • Work with your tax preparer to file the correct forms for requesting an extension.

Your advisor and tax preparer can help answer your questions about your tax situation.