3 Ways to Make Sure Your Tax Extension Application is Accepted

Make Sure Your Tax Extension Isn't Rejected
Make Sure Your Tax Extension Isn't Rejected. cogal/Getty Images

What are the Reasons the IRS Rejects a Tax Extension Application

The IRS does not reject many tax extension applications. But there are several reasons why they don't accept tax extension applications. I'll explain the reasons for rejection of a tax extension and how to make sure your application passes all three tests: 

1. Your Tax Extension Application Wasn't Filed on Time

Knowing when to file your extension application is tricky.

In general, your extension application is due when your return is due. But knowing when a tax return - and especially a business tax return - is due can be difficult. 

Each year the exact due date for returns changes, because of where the due date falls in the calendar. If a tax return due date is on a weekend or holiday, the due date is the next business day. Here's a list of tax return due dates for the current tax year. 

2. There Were Errors in Your Extension Application Form.

There are two extension application forms: 

For personal returns and small business returns (on Schedule C): Use Form 4868. You will need to include:

  • Your name and address and tax identification information
  • An estimate of your tax liability
  • How much you have already paid (in withholding, estimated taxes, or other payments), 
  • The balance due, and, of course
  • How much you are paying. 

William Perez, Tax Planning Expert. explains in more detail how to file a tax extension application. 

You do not need to file Form 4868 if you are paying your balance due electronically. The IRS will automatically process your extension application when you pay part or all of your tax electronically or by phone. Read more about tax payment options

For corporate and partnership returns (including multiple-member LLCs): Use Form 7004. 

The information is basically the same as for Form 4868, including an estimae of taxes due, already paid, and a balance due.

You will also have to include the code for the type of business tax return you will be filing. Partnership taxes are reported on Form 1065, corporate taxes are reported on Form 1120, and S corporation taxes are reported on Form 1120-S. 

For more information, see this step-by-step article about How to File an Extension For Your Business Taxes.

Pretty simple. But make sure you follow instructions. 

3. Your Information Changed  

A third common reason why a tax extension application was rejected is that your information changed and you didn't let the IRS know about the change. For example, if you changed your business address since your last communication with the IRS, they may not be able to match your tax information to the extension application information.

If your business information changed, you must notify the IRS in a specific way, using Form 8822. 

Review Your Application Before Filing: A Checklist

  • Make sure you are using the correct extension application form for your business type.
  • Check your application to make sure you didn't make any errors. 
  • Did your business or personal information change? Follow the correct process for making this change. 
  • There is no extension on payments! To avoid fines and penalties, make sure you include the payment for your taxes. You can pay . You will have to do some calculating to come up with a general estimate. 

One More Thing to Check of Form 4868

The IRS says: 

When filing Form 4868, please note that the revision year shown in the upper right-hand corner of the form's first page must match the revision year shown on the individual income tax return for which you are seeking an automatic extension to file. For example, if you seek an automatic extension to file Form 1040 and it states "2014" on the top of its first page, please use the revision of Form 4868 that states "2014" in the upper right hand corner of Form 4868's first page.

What if My Tax Extension Application is Rejected? 

If your extension is rejected, you can re-apply, but if you didn't file the application until the tax due date, you may have fines and penalties due.

File early so if your extension application is rejected you will be able to re-file before the tax due deadline.

Finally, don't forget the due date for completing and submitting the extended tax return. The time you have to complete your return depends on your business type.