A Quick Rundown on Tax Extensions

Tax Extension Facts to Avoid Penalties

Here are some quick tips to help you understand tax extensions and avoid penalties down the road.

Tax day is almost here, but if you are a service member or spouse of a service member, you may qualify for some extra time to file and pay your taxes.

As a final wrap-up to Smart Military Money’s Tax Tips & Tricks series, here is a brief overview of tax extensions and how they can help military members and their families.

Applying for a Tax Extension

If you’re in the U.S. and need additional time to file your taxes, you can submit a Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return for a six-month extension to file your return. This option is open and available to everyone, and there are no fees or penalties associated with it. The catch is that this form must be filed by the original due date (this year, it’s April 17).

It is important to note that this form does not extend the due date for the payment of taxes. That may seem counterintuitive, but the I.R.S. still requires payment to be sent by the normal due date in order to avoid penalties. If the payment ends up being more than you owe, you will receive a refund after filing. If it ends up being less, then you will have to pay the difference in addition to penalties based on the amount still owed. Just make your best guess based on previous tax returns.

You should also not expect a response confirming the extension for filing, but you will be notified if the request is denied. This is typically the result of applying too late, so act fast if you plan to do this.

Automatic Tax Extensions for Military

Your filing date may also be automatically extended if you’re a service member or spouse of a service member who is either stationed overseas or deployed to a combat zone.

If you or your military spouse are stationed overseas, you are automatically granted a two-month extension to file and pay your taxes. You can still submit a Form 4868, but this will only grant you a four-month extension instead of a six-month extension. Again, this form does not extend the time allowed for you to pay your taxes.

If you or your military spouse are deployed to a combat zone, you will receive an extra 180 days plus however many days there were before taxes were due when you were deployed. For example, a soldier deployed on March 1, 2012, would have 226 days from the date they left the combat zone to file and pay taxes for 2011. This comes from the 180 days plus the 46 days between March 1 and April 15.

Couples must file a joint tax return for a military spouse to benefit from these extensions. However, there are a lot of other specific situations in which a spouse may or may not qualify for an extension, based on the surrounding circumstances. If you would like more information, check out the Armed Forces’ Tax Guide for 2011 Returns.

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