Financial Planning Tip for April: Be Smart About Filing a Tax Extension


April 17th is fast approaching. Thinking about filing for an extension? You may know the IRS grants an automatic six-month extension to file your taxes. But extending the tax date is more complicated than you may realize.


The IRS will grant an automatic six-month extension to anyone who properly files form 4868. This is an extension to file your taxes, not an extension to pay your taxes. Thus, you’ll be asked to make a guess on your balance due and pay any shortfall when you file the form. Don’t make a lowball guess, because you’ll be charged interest on taxes paid after April 17.


What if you expect a refund? Is there any point in filling out the 4868? (Yes!) Can you just enter all zeros and make it easy on yourself? (No!)


Reasons you need to file this form with thoughtful estimates:

- Not filing an extension means the due date of your return remains April 15.

- There are a number of elections that have to be made by the due date of your return: SEP-IRA contributions, recharacterization of a Roth IRA, and the election to carry forward a Net Operating Loss, to name a few. Not filing form 4868 in April means the window has closed on these elections, so your tax planning opportunities are limited down the road.

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The Treasury Department and courts have held that tax must be “properly estimated” for the extension to be valid. Filing a form laden with zeroes indicates the tax hasn’t been properly estimated, thus invalidating the application for extension.


Form 4868 is nine lines long. It’s worthwhile to be thoughtful when completing this short form in exchange for the flexibility and additional time it grants.

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