File an extension when the return you would file on April 15 would be worse than the one you could file in June. That is the whole test. Accuracy beats speed, because an amended return costs more time and money than an extension does.
File one if
- A K-1, a corrected 1099, or a brokerage statement has not arrived. Filing without it means amending later.
- A life event happened: a death, a divorce, a move, a business sale. These returns take longer and are wrong more often when rushed.
- Your preparer has told you they are out of time. Good preparers extend clients they cannot finish carefully.
- You want to fund a SEP IRA or solo 401(k) for the prior year and need until October to do it.
- You are out of the country and want the automatic two-month extension to stack with the six.
Do not bother if
- You are getting a refund and the return is simple. File and collect.
- You need the return for a mortgage application, financial aid, or a visa. Lenders want filed returns, not extensions.
- You think it delays the payment. It does not.
What an extension does not do
It does not extend the payment. It does not extend the deadline to contribute to a traditional or Roth IRA. It does not delay the statute of limitations start in your favor. It does not raise or lower your chance of examination.
Common mistake
Extending because you cannot pay. If money is the problem, file on time and set up a payment plan. The failure-to-file penalty is 5 percent per month. The failure-to-pay penalty is 0.5 percent. Extending to avoid paying solves the cheap problem and creates the expensive one.
Ready to file it?
You can file a personal extension (Form 4868) or a business extension (Form 7004) online in a few minutes with TaxExtension.com, an IRS-authorized e-file provider operated by our publisher. The extension is automatic; the payment is still due on the original date.