Is there really an automatic extension on filing taxes?

Question:

I might need some extra time to file my tax return this year. I heard that the IRS will grant an extension until August 15th. Is this true? If I'm granted an extension, does that mean I have until August 15th to actually pay my taxes?

Answer:

Put on your cynic's hat, and answer the following question: Which do you think the IRS would rather have first -- the paperwork, or the money? If you guessed the money, you're right. You'll have to send the IRS a check for your entire tax bill by April 15th, or face late fees and penalties on the unpaid amount. Although there is a form called Application for Extension of Time for Payment of Tax (Form 1127), this seems to be the IRS's version of an April Fool's joke -- such extensions are almost never granted.

But let's not call the IRS ungenerous. They will give you up to August 15th to file the paperwork. To get this extension, complete Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. Send it to the IRS by April 15th. You can obtain this form from www.irs.gov or by calling 800-829-3676. Because this application is granted automatically, you won't receive anything in the mail confirming your extension.

If you need yet another filing extension, you can file Form 2688, Application for Additional Extension of Time to File U.S. Individual Income Tax Return. Although this second extension is technically discretionary, it's usually granted (just make sure you have a good reason -- "the dog ate my receipts" has already been done). This time, the IRS will send you back a copy of your request stamped either "granted" or "denied." If they grant your request, you have until October 15th to file your return without incurring any late filing penalties.

Again, if you do apply for a paperwork extension, you still have to pay the taxes -- or be subject to late fees and penalties. If you don't know the exact amount you'll owe, you'll have to estimate, and then get a refund or pay the difference (with penalties and interest) after the dust settles.

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