Tick, tick, tick … the deadline for filing your 2017 tax return is rapidly approaching. The traditional due date is April 15, but you technically have until April 17 to file your 2017 return. Why? April 15 is a Sunday and April 16 is Emancipation Day (a holiday in Washington D.C.).
Luckily, if you know you won't have time to file by April 17, you still have options. Simply file an extension (using Form 4868) by the April 17 deadline to get an automatic six-month filing extension to Oct. 15.
Of course, this is a lifesaver if you're behind, but a filing extension may also provide the following benefits:
- You can avoid late-filing penalties and interest charges that will apply if you do nothing.
- The extension can preserve a refund from a prior year's return. With it, the usual three-year refund statute of limitations is extended another six months.
- If you're self-employed, you have extra time to contribute to a SEP-IRA for the 2017 tax year, thereby lowering your 2017 tax liability.
- It allows you more time to make certain elections, such as claiming a Section 179 deduction for qualified business property placed in service in 2017.
- If you converted from a traditional IRA to a Roth in 2017, you can undo the conversion with a recharacterization up until the extension date. This technique has been eliminated for conversions after 2017 by the new tax law. A filing extension does not provide additional time to make IRA contributions for the 2017 tax year, however.
FYI: This is an extension to file your return, not pay taxes.
If you think you'll owe money after filing, make a good-faith estimated payment of your tax bill by April 17. To avoid an underpayment penalty, pay at least 90 percent of your 2017 tax liability or 100 percent of your 2016 tax liability (110 percent if your adjusted gross income exceeded $150,000).