Important tax documents start arriving digitally and in the mail at the end of January, whether we want them or not. That means firing up the tax software (or scheduling an appointment with your tax accountant) to file your taxes before the deadline.
But what if you fall behind? If it’s looking like you won’t hit that 2022 tax deadline (April 18, 2023), you may want to file a tax extension.
The important catch? An IRS extension only gives you more time to file your taxes, not to pay them.
Here’s what you need to know.
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What is the deadline to file taxes in 2023?
The deadline to file taxes this year is Tuesday, April 18, 2023.
That date shouldn’t be too surprising. Tax Day traditionally falls smack-dab in the middle of the month on April 15. This year the date falls on a Saturday, so the IRS pushed the deadline to the next business day (Monday, April 17, is Emancipation Day in Washington, D.C.).¹
Following COVID-19, tax filers might have gotten used to an extra cushion: 2019 taxes weren’t due until July 15, 2020, and 2020 taxes weren’t due until May 17, 2021. Last year, however, the IRS moved back to a normal schedule.
But what if you’re not ready by April 18? Enter the tax extension.
If you request an extension, your new deadline will be pushed back (roughly) six months to Monday, October 16, 2023 – but again, the extension is only for filing your return. You’ll still need to pay whatever taxes you owe in full by the April deadline, and failing to do so could result in costly penalties.
No matter when you file, you can get your tax refund up to 5 days early² when you direct deposit with Chime and file directly with the IRS.
What is a tax extension?
So how does a tax extension work?
A tax extension gives you extra time to file your tax return – around six months, which is pretty cushy. But it doesn’t give you six more months to pay what you may owe.
So if you’re somebody who usually has to shell out to Uncle Sam come tax time – like an independent contractor or small business owner – filing for a tax extension won’t give you breathing room to do the math and cut that check. It just gives you a few more months to show your work and turn in your documents.
That said, if you know you’re going to be late anyway – due to documents gone AWOL, for example – filing an extension can help ensure you don’t run into late penalties (again, so long as you pay taxes owed on time).
Tax extensions also give you more opportunities to ensure the accuracy of your return, research potential tax credits and tax write-offs, fund your retirement plan, and more. (We’ll dive into all the good reasons to consider an extension – and reasons for caution – in just a minute!)
So how do you get one?
How to file a tax extension
Filing for a tax extension is very simple!
You can file a tax extension online in just a few minutes through the IRS Free File Program, which allows you to use third-party software to file a tax extension request for free. You can also ask your tax preparer or accountant to help you.
In most cases, the IRS will grant your request for an extension automatically without any additional explanation from you. It’s as simple as filing the form.
But should you file an IRS extension?
Reasons to file a tax extension
Although it may seem like procrastination, there are plenty of legit reasons to file a tax return extension including:
- You’re missing documents you need to file. Maybe your employer was late sending them out, or you needed a correction, but you can’t file your return if you don’t have your paperwork. In this situation, you need an extension to avoid being penalized.
- You need more time to ensure your return is accurate and up-to-date. If your tax situation has changed recently (think: you got married, had a baby, changed jobs, etc.), you may qualify for new tax deductions or credits – and you may need that added time to update your paperwork and ensure it’s accurate.
- You’re self-employed, and you want more time to fund your retirement plan. This is a special case, for sure, but if you work for yourself and open (or want to open) a SEP-IRA, SIMPLE IRA, or solo 401(k), filing for an extension on your return can also give you more months to put cash in those accounts.
Running behind? Here’s what happens if you file your taxes late.
Filing a tax extension: What to watch out for
As with any decision, there are some things to consider before filing for your extension. Keep in mind that:
- You’ll have to wait longer for your tax refund if you’re owed one. It generally takes three weeks to get your tax refund after filing – so putting it off for an extra six months can delay that special payday.
- The IRS extension does not extend your time to perform certain money moves like switching your return status from married-filing-jointly to married-filing-separately or putting more money into a traditional or Roth IRA.
And, as mentioned, filing a tax extension does not give you extra time to pay your taxes, just to file your return.
Important things to remember about tax deadlines
When filing your 2022 taxes this spring, here are some important dates and things to remember:
- What is the deadline to file taxes? April 18, 2023
- How long is the tax extension? Roughly six months
- When are tax extensions due? October 16, 2023
- Can you file taxes after the deadline? Yes, but you’ll pay late penalties and interest charges
Should I file a tax extension?
Filing a tax extension isn’t for everybody, but it can be helpful in the right context. If you know you’re going to be late, filing an extension can save you from pesky penalties.
An extension can also help you make any changes you might need to, including finding more deductions and credits. Less rush = more accuracy!
Taxpayers who are already substantially behind on their taxes should file for an extension, and here’s why: If the government owes you a refund, you must file a return to receive it. The IRS requires filing your taxes within three years.³ If you don’t, you could lose out on money that’s rightfully yours.
Filing a tax extension also extends the limit by six months to help you get your hands on your cash. After all, you earned it in the first place!
When will I receive my tax refund?
Ah, yes – the most pressing question most of us have this time of year: Where’s my money?!
There’s a lot of wiggle room with the timing of a tax refund. According to the IRS, most refunds are deposited to your checking account within three weeks – or mailed to you within six to eight weeks – of filing your return.4 However, the timeline can be substantially longer (or shorter) than that.
The important thing is to use the money wisely once it arrives, however long it takes. We have some suggestions on what to do with your tax refund, including fluffing up your emergency fund, paying off credit card debt, and saving for retirement. Cha-ching!
How do I deposit my tax refund to my Chime account?
Want to sit back, relax, and have your refund come to you? You can have your federal tax refund automatically deposited into your Chime account – no added effort necessary!
Simply list your account and routing number in your paperwork when filing your return, and your refund will be posted directly to your account as soon as it’s available. Which, we should add, could be up to five days earlier² when you direct deposit with Chime and file directly with the IRS. Just sayin’. 😎
Does Chime accept joint refunds?
If you and your (married) boo are filing together, good news: Chime does accept joint refunds. That said, the IRS can only deposit a tax refund into an account in the taxpayer’s legal name. So make sure the name of the primary filer is the one you have listed on your Chime account!
If your name has recently changed, you can contact Chime customer service to update the name on your account. If the names don’t line up, don’t worry too much: After three attempts, the IRS will issue your refund as a paper check. (So make sure they have the correct address on file.)
File late — but pay on time!
Filing a tax extension can be a great way to buy yourself extra time if you know you’re going to be late submitting your return – but it doesn’t give you more time to pay the taxes you owe. Tricky! Good thing you’re a savvy taxpayer who stays up-to-speed on all the ins and outs of the IRS.