What If I File an Extension?
As a tax practitioner, I have seen the prospect of filing an extension put some taxpayer’s minds at ease and create anxiety for others. So, what is an extension and what is the harm, if any, of filing an extension to give you more time to file your tax returns?
A “Form 1040” federal extension is requested by filing “Form 4868” and normally extends the filing due date of April 15th by six months to October 15th, but this year the IRS and New Jersey have extended the original due date to May 17th. Therefore, the extension will only extend the due date by five months instead of six months.
The important thing to remember is that an extension only extends the time to file your return and does not grant you an extension of time to pay your taxes due.
New Jersey will accept a copy of the federal extension, but they also have their own version “Form NJ-630” for taxpayers who are only extending their NJ return.
What if you owe taxes and file an extension, but do not pay the taxes due by the original due date? You will not get a late filing penalty, but you will incur late payment penalties from the IRS by doing so. In addition, the state of NJ goes even further by disallowing an extension if you do not have at least 80% of your tax liability paid by the May 17th due date and will result in both late payment and late filing penalties!
Both federal and state extensions are automatically granted, but you will need to file them by May 17th, either online or by mail - postmarked by May 17th or it will not be accepted.