Waiting for W-2s to arrive in the mail, gathering documents to complete your forms, and piecing together the last bits of information to complete your tax return can take months. It’s no wonder you may need extra time to continue working on your return. The Internal Revenue Service knows it might take some folks a little longer to get everything ready, so it offers an automatic six-month extension to anyone who requests one before the regular due date for returns. To get the extra time, you’ll need to estimate any tax you think you’ll owe and file Form 4868 by April 15.
Estimate your adjusted gross income (AGI). Add your income from all sources during the year, such as W-2 wages, net income from rental real estate or self-employment, retirement plan distributions and interest income.
Look at the “Adjusted Gross Income” section on page 1 of the 1040 form. This section lists certain deductions that reduce your AGI. If you qualify for any of these, estimate the amount of your deduction and subtract the figure from your AGI.
Subtract standard or itemized deductions. Look at page 2 of the 1040 form, in the upper left margin. You’ll see a list of filing statuses and the standard deduction for each. If you’re not itemizing deductions, subtract the standard amount for your filing status from your adjusted gross income estimate. If you’re itemizing deductions for expenses such as mortgage interest, state income taxes and property taxes you pay, and you estimate the amount to be more than your standard deduction, subtract the estimated total from your AGI. You can only use either the standard deduction or itemized deductions – not both. Review IRS Schedule A to estimate any itemized deductions you may claim.
Subtract personal exemptions. On page 2, line 42 of the 1040 form you’ll see a personal exemption amount. Multiply this amount by the number of people you’re claiming on the return. This includes yourself, your spouse if you’re married and file a joint return, plus any eligible children or dependents you claim. Subtract your total exemptions from your running calculation. The result is your taxable income.
Look at the tax tables in the back of the 1040 instructions. Find your filing status and estimated taxable income range. The amount shown is the estimated tax for your income before any credits are applied. Write the result on line 4 of Form 4868.
Calculate your tax payments. Look at your W-2s and other income tax documents to see if any federal income tax was withheld. On your W-2, this is shown in box 2. Add all federal income tax withholdings and write the result on line 5 of Form 4868.
Subtract tax payments from the estimated tax due. The result is an estimate of tax you’ll owe when you file your return. Write the result on line 6 of Form 4868.
Complete the rest of Form 4868. Fill out your name, address and Social Security number in sections 1 and 2. If you estimate you’ll owe tax when you file your return, write the amount you’re paying toward your balance on line 7 of Form 4868. Mail the form and your payment to the address for your state, shown in the instructions for Form 4868.
- Most states don't require a separate request for state tax extensions when you file a federal extension. Visit your state Department of Revenue website for details.
- When you send your request, mail it by certified mail. This gives you a receipt to prove you mailed the extension on time, plus gives you a tracking number to verify your package was delivered. Keep this proof with your records.
- An extension only gives you extra time to submit your return; it does not give you extra time to pay your taxes. If you estimate that you'll owe, you must send your payment before April 15 to avoid late-payment and/or failure-to-pay penalties.
With a background in taxation and financial consulting, Alia Nikolakopulos has over a decade of experience resolving tax and finance issues. She is an IRS Enrolled Agent and has been a writer for these topics since 2010. Nikolakopulos is pursuing Bachelor of Science in accounting at the Metropolitan State University of Denver.