Relax; take an automatic extension. If the April 15 deadline is closing faster than a blitzing linebacker, release the pressure by filing Form 4868, which gives you an automatic four-month filing extension to Aug. 16. Remember: This doesn't give you a four-month pass on paying the tax due. Your extension filing must include the full amount of estimated tax due. The IRS will accept a good-faith effort based on the information available.
Tip: Don't fear that an extension will draw more IRA audit attention to your return. More people are requesting extensions as tax returns become more complex. The IRS says 6.3 percent of taxpayers in 2002 requested an automatic extension to August 15. That's up from 5.72 percent in 2000.
Buy extra time for hardship situations. If you'll need more than a four-month extension, here's another option: File Form 2868 in August to receive a hardship extension for an additional two months, to Oct. 15. Unlike the initial four-month free pass, this extension isn't automatic. You have to explain your reason on the form. You can earn a hardship extension for medical reasons, for example, but not because you'll be on a yearlong yachting voyage.
Note: IRS statistics show that 2.02 percent of taxpayers requested a second extension to Oct. 15 in 2002, up from 1.94 percent in 2000.
Postpone payments when living abroad. Taxpayers who reside abroad typically earn an automatic filing extension until June 15. But if you merely expect to be traveling abroad on April 15, you won't receive an automatic extension. Note: If your spouse lives outside the United States and you file a joint return, you still qualify for the automatic extension to June 15.
Military taxpayers earn extra time to file. Taxpayers serving abroad in the military can benefit from the same automatic extension as those residing in foreign countries. Note: U.S. citizens serving in an area designated by the President as a combat zone are entitled to a tax-filing postponement. That goes beyond a mere filing extension. No interest charges or other penalties are imposed during the postponement.
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