In this video, Abhinav is sharing the IRS rules on how to get a tax return filing extension in US
Video transcript below (kindly note that auto-transcript can contain errors)
Hello, and welcome. This is Abhinav, and, I’m sharing in this video the rules for getting a tax return filing extension in USA. Right? So, we are near the near the tax filing season in USA or the US NRIs who are there. Please remember, the due date of the filing the tax return in USA for this year is April 15, 2024.
Right? So I’m making this video on 6th April, so it’s like still there’s 9 days to go. Right? So, now understand this that anyone who is filing a tax return in USA can get a 6 month extension by applying in form 8 4868 to reset the tax filing date by October 15th to October 15th. Now this filing of a tax extension is free of cost.
So, basically, why to file a tax extension? So tax filing a tax return extension is like an insurance policy. For example, if you have if you if your return is ready by April 15th, no problem. File a tax return extension so that if at all your return there is some error or there’s some problem in the return, you can still file a return by that time. Right?
So always, you know, CPAs in USA, they have this practice of filing a extension with their clients. It also gives them time to do the work for, you know, any additional work, any additional w twos or any statements that they get, they can incorporate. Any errors they can check and recheck. Right? So if you feel that you, you there any, you know, incomes or anything that you, are yet to get a clarity on, you know, or something where you think that there may be a delay, that you may not be able to file that as of today April 15th, Highly advisable that you get a 6 month extension.
You can apply in form 8 4868. Now many of the tax software and the filing portals, I think even TurboTax and all, they allow you to file a a tax filing extension. Even IRS Free File also allows you, for getting this kind of an extension. Electronically, you can file, so that is not a problem. So the last date of filing extension last date of filing for extension of the tax return, 6 month extension is April 15th.
Right? So April 15th is a the last date you can get this kind of a extension. You can apply for an extension. Now if you don’t seek an extension, then there is a failure to file penalty. See, there are 2 kinds of penalties in US tax.
1 is a failure to file penalty by the due date. Right? The due date is April 15th, or if you seek an extension by October 15th. If you don’t file it by that time, then there is a 5 percent of the tax up to 25%. That kind of a penalty, 5% per per month, or part of the month up to 25%.
That penalty is there. 2nd penalty is failure to pay penalty. Now regardless of you seeking a extension of filing, late, you have to pay the tax by April 15. There is no, you know, extension to pay. So if you delay the payment, then there is a penalty, but that is a very small as compared to failure to file.
That is 0.5%. Right? So that is very small as compared to failure to file penalty. So important thing is to file the return either on time by April 15th or you get an extension by October 15th. But in any case, you should try to if there is a tax due, pay by pay it by you can go to pay dot go site.
Yep. Pay p a y dot gov, and you can make an electronic payment. You can at least pay your tax returns in time. Right? Okay.
Extension of time to file a return does not grant you any extension of the time to pay. So any delay from April 15, 2024 in paying your tax do you will you know, the meter will start. Right? So you need to be careful. Why to file when you need more time to prepare, check for any errors, what will include any other incomes, especially if you have, like, a if you are a tax run filer from India and you have something, you know, foreign tax credit, something is there which you want to you need some more time, you know, to assess.
So better to file an extension for 6 months. You get a free 6 months extension. There’s no charges. Filing this tax is return extension is free for all. Now understand this.
If you are a US citizen or a resident alien who is a resident alien? I made a separate video on the residential status as per US tax where you can check. Resident Alien is a person who either passes the Green Card test, the lawful permanent resident test, or who’s a who has this passes a substantial presence test. Right? Who who’s substantially present in US during the calendar year 2023.
Now these people, if US citizen or resident alien, if on April 2024 April 15, 2024, you are outside of the US You are outside the US at that time. You get an automatic 2 month extension to file the return and pay tax. This is a automatic extension. You don’t need any, kind of a, form filing or form 88 4 868. You don’t need that.
You get automatic 2 month extension. However, what I’ve heard is people who process the returns at IRS, they are sometimes not aware of this provision, so they may not grant you an extension. But you can still go back to them and say, this is given in the IRS publications. So you can tell them very clearly that this I am entitled to this 2 month automatic extension to file return and pay tax. Better, I will suggest, before April 15, 2024 only you go and apply for a 6 month extension in form 4868.
Right? That’s a better option, I will say. Then there is a discretionary 2 month extension over and above a 6 months extension for taxpayers who are living outside the US. But for this, you have to write to the IRS, and there is this thing that if you don’t hear from the IRS, then they accept. Right?
So it’s a like a discretionary. I said IRS can also reject. The 6 months extension, IRS cannot reject that that you they have to give you even this 2 month, they have to give you. But there is a 2 month extension over and above October 15, which is, like, December 15, where it’s said on the distribution of IRS. Now very important provision of the nonresident aliens, Who are nonresident aliens?
Who are neither US citizen nor US Green Card holder, who don’t qualify for even the substantial presence test. Right? For nonresident aliens, there is a specific provision that if you’re not an employee or a self employed person who receives wages or nonemployee compensation subject to US income tax withholding or if you don’t have a office of place of business in the United States, you must file by the 15th day of 6th month after your tax year ends, which is for 2023. This is June 15, 2024, plus you can get a 6 month extension by filing 4 868. That means the time frame for you is December 15th 2024.
This is specific provision for nonresident aliens. Then there is also some additional provisions on residency text test extension for claiming foreign earned income exclusion or treaty benefit. In that case, you’re required to file form 43 2350 to the IRS. Then there is one more provision that if you make an electronic payment of taxes for the year, at the time of making the electronic payment of taxes, you can indicate an extension. There and then, if I think in the pay.gov website, maybe you can go and there is a check mark where you can go and check that I am indicating an extension.
Right? That means I am paying the tax before April 15, 2024, but I want to for filing the tax return, I seek an extension. Right? And then you don’t have to file which form. This 4868 form, you don’t need to file.
Right? And it is automatic. You get a 6 months extension. So that is also a good thing. If you want to do, you can do that.
Right? So these are some provisions on filing a tax return extension in USA that I shared. Always better if you if you feel that April 2015, 2024, you are not able to file a tax return due to whichever reason your tax preparer is not available, your CPA is busy, you have some incomes that need to be collected. Just go ahead right now today. Go ahead and file a tax return extension.
You’ll get an automatic 6 month extension. So I hope this, video was useful, and do share your thoughts and feedback. Thank you so much for watching this video. Thank you so much.