If you have clients that need more time to complete their tax return, filing a tax extension (Form 4868) is a simple way to help them stay compliant and avoid unnecessary penalties. With TaxSlayer Pro, you can quickly file Form 4868 and give your clients up to six additional months to file their tax return.
However, it’s important to avoid common misconceptions such as an extension does not extend the time to pay taxes owed, which can lead to penalties and interest if misunderstood. Extensions are especially helpful for incomplete returns when clients are waiting on key documents or need additional time for complex calculations, but they must be filed by the original deadline (typically April 15th) to be valid. Understanding how to file a tax return extension helps ensure your clients use this form effectively and avoid costly mistakes.
How late can you request a tax extension for your client?
Forms for filing extensions are due on the tax filing deadline. This date typically falls on April 15th, but circumstances like federally declared natural disasters can push it back.
Do clients need a reason to file a tax extension?
Most of your clients qualify for a tax extension, no special circumstances or “good enough” reason required. As long as Form 4868 is completed correctly and filed on time, the IRS will grant the extension. This makes it easy to provide clients with additional time to file, even if they simply need more time to gather information or finalize their return.
Which clients qualify for an automatic tax extension?
In some cases, your clients may receive additional time to file without needing to file Form 4868 at all.
For example, taxpayers living in areas impacted by a federally declared disaster may qualify for an automatic filing and payment relief. In these cases, the Internal Revenue Service (IRS) extends deadlines for affected individuals, and some FEMA-designated disaster area taxpayers may still qualify for relief even after the normal filing deadline has passed.
In certain post-deadline disaster situations, Form 4868 may need to be mailed rather than electronically filed, depending on IRS guidance and system availability at the time. U.S. citizens or resident aliens living abroad automatically receive a two-month extension (until June 15th) to file their tax returns and pay any taxes owed. This applies if they are either in military service outside the U.S. and Puerto Rico or living outside the U.S. and Puerto Rico with their main job or duty station there.
Does filing a tax extension help my clients avoid late fees?
Yes, but only some late fees. The IRS assesses penalties for both late filing and late payment, it’s important your clients understand the difference. Filing a tax extension (Form 4868) helps clients avoid late filing fees if they file by the extended deadline (typically October 15th). However, filing an extension does not prevent late payment penalties, and interest may still accrue any unpaid tax balance after the original filing deadline.
If a client does not owe taxes or is expecting a refund, they generally won’t face late payment penalties. However, for clients who owe taxes but need more time to pay, filing an extension may not be their only, or best option. Filing the return on time and exploring IRS payment options can help reduce penalties and manage their balance more effectively.
Extension payment reminders for clients
It’s important to help clients understand how Form 4868 works so they can make informed decisions about their tax situation. When discussing extensions, keep the following key consideration in mind:
- Extensions provide more time to file, not to pay
- Interest may accrue on unpaid balances
- Clients should estimate taxes owed as early as possible
- Payment plans may help clients who cannot pay in full
What is the new filing deadline for clients who received an extension?
The extended tax filing deadline is October 15th (or the next closest business day if that falls on a weekend or holiday, but it’s usually in their best interest to file as soon as possible. Even though they will not accrue fees for late filing during this time, they could still be accruing fees if they have an outstanding tax payment.
How do I file taxes for clients with a filing extension?
Filing a tax extension gives clients additional time to submit a complete and accurate tax return, which is often preferable to filing prematurely with missing or incorrect information. This is especially beneficial for clients who are still waiting on key documents such as W-2s, 1099s, or K-1s, or those with more complex tax situations that require extra time for proper reporting and tax planning. In these cases, filing an extension can help avoid errors, amended returns, and potential compliance issues.
Once you’re ready to file, complete the return as you usually would in your TaxSlayer Pro software (Desktop Extension Filing Instructions vs. Pro Web Extension Filing Instructions). If their Form 4868 was electronically filed or postmarked by the tax filing deadline, they won’t face late filing penalties. However, keep in mind that while filing an extension allows your clients extra time to submit their return, it does not extend the time to pay any taxes owed.
Note: These penalties won’t be reflected when you file their taxes in your TaxSlayer Pro software. They’ll receive a notice from the IRS later concerning any late payment penalties.
What if my client didn’t file for an extension but still has not filed?
If your client didn’t file for an extension and still hasn’t submitted their tax return, they may face failure to file penalties for each month the return is late. In this situation, it’s important to encourage your client to file as soon as possible, even if they cannot pay the full amount owed.
If a taxpayer unexpectedly owes taxes, filing as soon as possible can help reduce or stop the failure-to-file penalty, which is typically more severe than the failure-to-pay penalty. While penalties and interest may still apply, taking action quickly can significantly limit the total cost.
Even clients who expect a refund should prioritize filing. Although they won’t face late payment penalties, filing an extension (when possible) or submitting the return late can still be beneficial if they need more time to complete an accurate return and avoid errors.
What is First Time Penalty Abatement?
First-Time Penalty Abatement (FTA) is an IRS relief option that may allow eligible taxpayers to have certain late filing or late payment penalties reduced or removed, if it’s their first time incurring a penalty.
Your client may qualify for First Time Penalty Abatement if they meet the following criteria:
- They did not have to file a return or had no penalties for the past three tax years
- They have filed all required returns, or filed an extension if applicable
- They have paid, or arranged to pay, any taxes owed
If you believe your client qualifies, advise them to call the number on their IRS notice to ask if they are eligible and learn the next steps. If you have representation rights before the IRS, you can assist your client in this process by contacting the IRS on their behalf.
