File Later Or Fix A Mistake? – Extension of Time to File Taxes vs. Amended Tax Return

This year, you have until April 15 to file your tax return (some years the date is off).

But that doesn’t mean that you’re ready to file.

You might want a little more time to get things together, or you might need to make changes to an already-filed return.

It is important to understand the difference between a tax extension and an amended return.

Read on and you’ll know for sure which of these 2 choices is right for you.

Extension of Time to File Taxes

If you don’t think that you will be able to complete your tax return on time, you can file a Form 4868.

This short form is your extension to file form. You can file this form electronically.

A tax filing extension provides you with six extra months, meaning you won’t have to have your return ready to go until October.

Here are some points you should be aware of if you want to file an extension:

1. You Still Have to Pay What You Owe

An extension to file your tax return is not the same thing as an extension to pay what you owe.

Sorry, the IRS still wants their money.

The IRS still expects you to pay what you owe by Tax Day. You can estimate what you think you will owe, and pay that, and file your Form 4868 by Tax Day.  If you don’t pay what you owe, there will be penalties involved.

2. Paying 90% of Your Liability When You File for an Extension Can Help You Avoid Penalties

If you pay 90% of your tax liability by Tax Day, when you file your extension, you can avoid a failure to pay penalty. However, you have to make sure that the remaining 10% is paid when your extended tax return is filed on time.

3. The Penalty for Not Filing is Usually More than the Penalty for Not Paying

The IRS will charge you penalties when you miss certain tax deadlines.

Interestingly enough, the failure to file penalty is usually more than the failure to pay penalty. This means that if you can’t pay your taxes, but your return is done, you are better off arranging a payment plan with the IRS and making sure your paperwork is in. If your return won’t be ready, be sure to file for an extension to avoid the failure to file penalty.

4. You Won’t Get a Refund Right Now

Even though you have to pay what you owe in taxes right now with a tax extension, you won’t get a refund immediately. If you think you are due a tax refund, you won’t actually get it until after you have filed your tax return.

So, if you file for an extension, it’s best if you get your paperwork done as soon as possible, rather than waiting until October. The faster you file your return, the faster you’ll get your refund.  (Direct deposit helps as well.)

Head on over to the irs.gov page for Form 4868.

Amended Tax Return

Filing an amended tax return is a completely different process.

Instead of asking for extra time, you are changing what you have already filed.

This can be because you need to add more income, or because you want to take a tax credit that you missed before. Normally, if you want a credit or a rebate, you have to file your amended return within three years of your original filing.

You are eligible to file an amended return from other tax years.

Note for same-sex couples that are married – you may want to consult a tax specialist to see if it makes sense for you to amend past returns.

The proper paperwork for an amended tax return is Form 1040X. If you expect to receive a rebate, it’s best to wait until after you have your refund. In any case, you will need to wait until the IRS has accepted your original refund to file an amended return. Your Form 1040X will allow you to enter original amounts in one column, and the new amounts in another.

You should note that, even though you can file your tax return electronically, and file for an extension electronically, you will probably have to mail in your amended tax forms. The IRS does have a fillable Form 1040X, but you will have to print it out and mail it in by hand if it is for any year prior to tax year 2010.

Interestingly, the IRS is allowing you to file an amended return electronically starting with tax year 2010. So, if you have already filed your return for tax year 2010, and you find that there has been a mistake and you need to amend your return, you can actually do this electronically. Check eFile.com for information on how to do this properly.

Because of the extra difficulty in filing an amended tax return — if if you can file electronically — many choose to file for an extension if they think that some of their information will be missing or incomplete come Tax Day.

If you’ve already filed an amended return you can check the status of the amended return using the Where’s My Amended Return tool on the irs.gov site.

Head over to irs.gov for Form 1040X.

Final Word on an Extension of Time to File Vs an Amended Tax Return

Here’s the difference in a nutshell:

Extension of Time to File – For when you need more time to put together your tax return.

Amended Tax Return – Use this if you have made a mistake or there was a change in your filing status that would affect past returns.

What you decide depends on your own circumstances.  Consult a trusted tax professional for advice on what works best for you.

And remember: In either case, you still have to pay on time.