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Extensions: life after April 15th

What is an "extension"?

It's one of the very few cases when the IRS lets us (temporarily) off the hook. Anybody who did not file tax return by April 15th could legally request additional six months to do so and thus avoid late filing penalties. The official name for the deal is an "automatic 6-month extension of time to file." Applying is unusually easy: just fill out and mail Form 4868 which is less than half-page long. No questions asked, no need to provide a reason. The catch is that you still have to pay the tax by April 15 - it's only the paperwork that could be delayed until October 15!

How is it possible to pay the tax without knowing how much?

Since the exact amount of tax is unknown until the actual tax return is completed, you are expected to estimate. If you overestimated and overpaid, you'll get a refund. Otherwise, you'll have to pay the difference plus interest.

What if I did not apply for the extension in April?

Then it's too late, sorry. You're considered a late filer. Expect penalties and interest. It's in your best interest (pun not intended) to prepare and file your return as soon as possible, even if you can't pay. You're not eligible for a second extension either.

How do I indicate that my return is an "extension" return?

There is no difference between April and October returns: same forms, rules, and requirements. You can download all this stuff directly from the IRS Web site. Just remember to include the amounts (if any) that you already paid in April, when you filed the extension request. Provided that you timely filed the extension form 4868, you're not subject to late filing penalty. Other penalties and interest may still apply though.

Is it true that returns filed "on extension" are not audited?

No. If you know how returns are selected for an audit, you realize that no return can be "audit-proof." However, there is a popular theory that the IRS fills its audit quotas by the time the extension returns are filed, and therefore risk of an audit is reduced to minimum. Nobody but few insiders know if it's indeed true. I wouldn't count on that. And, if you remember The Three Little Pigs, don't go on a cheating spree to tease the Big Bad IRS Wolf.