What If I File an Extension?
As a tax practitioner, I have seen the prospect of filing an extension put some taxpayers’ 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 extends the due date of your return from April 18th to October 15th, 2022, giving you a six-month extension of time to file.
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 that are 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 or who need to make a payment with their extension.
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 of time to file if you do not have at least 80% of your tax liability paid to them by the April 18th due date and this will result in both late payment and late filing penalties!
Please note that both federal and state extensions are automatically granted, but you will need to file them by April 18th, either online or by mail - postmarked by April 18th or it will not be accepted.