Tax deadline extensions are a great thing to offer to clients who are worried about getting their forms in on time. Whether they have complicated business returns to file or simply waited until the last minute, be prepared to explain how an extension works and what the benefits are.
What You Should Know
Taxes are usually due on April 15th every year. If this date falls on a weekend, the deadline moves to the following Monday. Other events, like COVID-19, can also impact the tax filing deadline.
If your clients are not ready to file their taxes by April 15th, you can help them file for an extension. An extension pushes back the filing deadline to October 15th, giving them an extra six months to gather their forms, receipts, and records.
It’s important to note that a tax deadline extension is not an extension to pay. Help your client calculate how much they owe if they have an amount due, because their liability must be paid by April 15th.
If your client cannot pay by April 15th, they may incur late payment penalties even if they apply for an extension.
Some common reasons people may want to apply for an extension include:
- Unexpected life events
- IRA conversions
- Missing tax records
How to apply for a tax extension
To apply for an extension for your clients, file Form 4868 for federal individual returns and Form 7004 for federal business returns. Most states will automatically give your client an extension if they file for a federal one.
A perfection period of five days applies to electronically filed individual returns on extension that were filed and rejected by the October 17 filing deadline. The IRS considers returns that are retransmitted electronically, within five calendar days of the due date of the return, as timely filed returns.
1041 – Bankruptcy Estate Filing Deadline
Bankruptcy estate returns on extension are also due by October 17 before midnight, in your local time zone. A perfection period of five days also applies to electronically filed 1041 returns on extension that were filed and rejected by the filing deadline. The IRS considers business returns that are retransmitted electronically and accepted within five calendar days of the date a return is rejected, as timely filed returns.