If you need more time to file your taxes this year, the IRS allows you to file an extension. That gives you an extra six months to complete your return. And while filing an extension doesn’t prevent you from having to pay your tax bill by the deadline, there are a few reasons why it may be the right choice for you.
Take a look at the top five reasons why you should consider filing a tax extension this year.
1. You don’t have all your tax and financial information yet.
If you have a small business, for example, you may still be working on the books. Or you could be waiting for a letter confirming a charitable contribution. You may even still need the basis of stock you sold or a specific document from a financial institution. If you’re waiting on information that’s critical to helping you file your return accurately, it’s likely best for you to wait until you have that information.
2. A partnership or other organization hasn’t sent out forms.
If you are a partner in a business and are waiting to receive your Schedule K-1, it’s perfectly fine to file an extension and wait to receive that document.
3. You have an emergency that prevents you from completing your return.
Unexpected hospitalization or long-term illness, a family emergency, or just crunch time at work can make it difficult to finish your return. No worries. Give yourself a little more time for this important financial task.
4. You need more time to make contributions or change a retirement plan.
If you are considering funding a retirement plan or starting a new one for the 2021 tax year, you may want to file an extension so you have more time to complete that task. Contributions to an IRA are tax-deductible, which you can claim on your 2021 return to reduce your taxable income. Just remember, you must make that decision by the April 18 filing deadline.
5. You want to make elections on your return, but you won’t know which election is best until later.
If you have losses that you can carry back to prior years, you may not know until later in the current year if that’s a good idea or if you should use the losses on a future tax return.
How to file a tax extension for free in TaxAct
Follow the Q&A steps in TaxAct to complete IRS Form 4868 to file an extension. Estimate your information if necessary.
Step 1: Log into your return and click the Filing tab.
Step 2: Select File Extension.
Step 3: Click yes to indicate you want to file an extension.
Remember, filing an extension doesn’t give you extra time to pay your tax bill. That’s still due by April 18. If you want help estimating your tax due, click the Estimate My Tax button within the steps to file an extension. If you’d like to simply move forward with completing the form, select Complete Form 4868 and insert your information as prompted.
You can print or e-file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, as well as the necessary state forms.
Be sure to make a payment with your extension if you estimate you will owe more tax.