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Getting a Filing Extension Will Be Easier

The IRS has made it easier to delay filing your tax return. Beginning with 2005 tax returns due in 2006, most taxpayers who need more time to file their returns will be granted an automatic six month extension, without stating a reason or providing a signature. Here's a rundown of how the rules have changed:

Old Rules

Taxpayers could obtain an automatic four-month extension from April 15th to August 15th by filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. Then, those who needed more time had to send another form to the IRS by August 15th. But second requests weren't automatically granted. Form 2868 required taxpayers to provide a reason why they needed more time. If a request was granted, a taxpayer could get another two months to file, until October 15th.

New Rules

Taxpayers can now request an automatic six-month extension to file. To get the extra time, you only need to file the new Form 4868 by April 15th. This gives taxpayers until October 15th, eliminating the need to interrupt their August vacations to think about taxes.

(However, the dates for 2006 are different because both April 15 and October 15 fall over a weekend. So for 2006, you need to file Form 4868 by Monday, April 17 and file your tax return by Monday, October 16.)

One caution: As always, an extension to file is NOT an extension to pay your tax bill. You must make a good faith estimate of the amount due and make a payment at the time you file Form 4868.

Good News for Business Taxpayers Too

A new streamlined extension process will also help business taxpayers by eliminating three existing forms:

Old Rules
Only corporations could request an automatic six-month tax-filing extension. Eligible noncorporate business taxpayers had to request an initial three-month extension, then if more time was needed, make another request for three more months.
Only corporations could request an automatic six-month tax-filing extension. Eligible noncorporate business taxpayers had to request an initial three-month extension, then if more time was needed, make another request for three more months.
New Rules
Beginning January 1, 2006, all eligible business taxpayers can use Form 7004 to request an automatic six-month extension of time to file. This includes partnerships and trusts.
Beginning January 1, 2006, all eligible business taxpayers can use Form 7004 to request an automatic six-month extension of time to file. This includes partnerships and trusts.