How & Why to Extend Your 2018 Form 1040

KEY POINTS:

  • Filing an Extension does not increase your IRS audit risk
  • There are a lot of reasons to extend your 2018 tax return
  • The extension is free and extends your return until October 15, 2019
  • The extension is on for time to file, you still have to pay your taxes by April 15, 2019
Use Form 4868 to extend your personal income tax return until October 15, 2019
Use Form 4868 to extend your personal income tax return until October 15, 2019

Filing an extension does NOT increase your audit risk

The myth that filing an extension increases your risk of an IRS audit has been around for as long as I’ve been working in the tax field. I really don’t know how it started, or when it started, but some how it became ingrained in everyone’s mind as a verifiable fact. The truth is, I’ve never seen any research that proves this nor have I seen anything first hand which would support this myth.

In fact, logic says that the IRS would rather you extend your tax return so you can make sure it’s correct rather than rush to get it done by April 15. This year probably has more reasons that you should extend and not rush than any year I can remember.

Main reasons you might want to file an extension this year:

  • There is a big change in tax law for 2018 that, in general, will require more time to prepare your tax return.
  • The tax forms changed a lot! There is no longer a Form 1040-EZ and the main Form 1040 is now a 2-sided postcard (not really) that has 6 potential schedules to prepare.
  • There are a lot of changes related to itemized deductions. These changes include limits on state and local taxes and no more miscellaneous deductions. However, you do have a higher standard deduction. You are going to want to spend more time comparing the two options to make sure you take the one that benefits you most.
  • If you own a small business or have flow-through income from a business like a partnership or S Corporation, you’re going to want to spend time learning about and figuring out the amount of the new pass-through income tax deduction under Internal Revenue Code Section 199A.

How do you get the extension?

The extension is automatic but you do have to file IRS Form 4868. This will extend the due date to file your form for six months, that is, until October 15, 2019. Keep in mind that this extension is only an extension in the time to file your return. The payment of your taxes is still due on April 15, 2019. If you owe taxes and don’t pay them by April 15, 2019, even if you have an extension, you can be subject to penalties and interest on the amount due. You can mail your payment with the extension or you can make your payment online at the IRS website for “Paying Your Taxes“. If you are using tax software, the software might allow you to use an automatic payment service along with e-filing your return.

You do not need special software to file an extension and you really shouldn’t pay extra to a software company just to file the extension. A pdf version of the extension can be downloaded from the IRS website that you can fill-in, print and mail to the IRS. Remember that the postmark must be by April 15, 2019 for the extension to be valid. We always recommend using the US Postal Service and using certified mail to prove you mailed it on time and can track the delivery of the package.

It really is a shame the IRS doesn’t have a website where you just fill in the information and submit it online but it is simple enough anyone should be able to do it. The IRS Free File Software is available to file for free if your income is below $66,000 and you can access it from the IRS website here.

This information is not tax advice and is intended to give you a general idea of why and how to file an extension for your 2018 personal tax return. If you need to calculate how much to pay or have further questions, you should contact a tax professional who can guide you through the process. You can reach me through the “Contact Me” link on this website or find me on twitter at @cbriancpa