How to File a Tax Extension in California (For Individuals) - The Easiest Way
How to file tax extensions in California
If you’re wondering things like “how do I file a tax extension in California?” or “when is the deadline to file a tax extension in California?” or “does California accept Federal extensions?” then you’ve come to the right place.
In this article I’m going to answer all of these questions and layout a simple easy to follow step by step guide of how you can file a tax extension in California and make sure you avoid any late fees!
1. State vs. Federal Tax Extensions
Remember, you'll have to extend both the state and the federal tax return, don't forget one or the other.
Residents of California have to file both Federal tax returns as well as California state tax returns. If you are seeking an extension you will have to file an extension for both federal and state in order to avoid any penalties or late fees.
If you were asking “does California accept Federal extensions?” then the answer is no, but luckily according to the California State website (CA FTB), all tax returns are automatically extended until October 17, 2022.
2. California State Tax Return – Extension
You can extend your tax return, but you must be on time with tax payments.
As mentioned above there is some great news! California is allowing all residents to automatically extend their state tax return – no form required! The new due date with the automatic extension is October 17, 2022.
However, there is one important caveat to this – tax payments (estimated) are still due by April 18, 2022.
Since this article is being published past April 18, 2022, if you haven’t made your estimated payment then you’ll likely owe a late payment penalty.
According to Landmark Tax Group’s article here, you’ll owe “5% of the unpaid tax(or underpayment), plus 0.5 percent of the unpaid tax for each month or part of a month it remains unpaid. The maximum penalty is 25 percent of the unpaid tax.”
The California State website also has a chart with penalty references, but it can be a bit overwhelming, take a look at that here.
It is worth noting that if you are facing a significant tax burden then you should seek legal counsel to help you avoid as much of the penalties and interest as possible.
If you're behind on tax payments, find legal counsel to fight the penalties.
3. How to pay your California State Tax Return Late Fees
If wondering, “okay, but how do I pay my late fees and estimated taxes?” then look no further. California’s state website once again provides the information for individuals. California accepts the following payment types:
You can use any of these 5 different methods to make a payment.
You probably have the option to pay back-taxes in monthly installments.
4. Federal Tax Return – Extension
Federal tax returns are normally due by April 15th (April 18th in 2022), but the IRS does allow extensions until October 15th (October 18th in 2022). In order to file your extension you can use IRS Free File (available here), which has guided tax preparation options (AGI 73,000 or less) and free forms to allow people to file their taxes freely and easily.
For federal extensions the same caveat about your payment applies. You are required to make an estimated tax payment by April 18th or you'll have to pay penalties and fees.
The late fees for your Federal tax return are similar to the California state tax return, but slightly different. For Federal tax return late payment penalties you’ll be responsible for 0.5% penalty for every month you fail to pay up to 25% (article from IRS here).
Note that here there is no 5% automatic kicker as with the California late fee.
5. How to pay your Federal Tax Return Late Fees
If you’ve calculated how much you’ll owe (including late fees) and would like to see your payment options, then head over to www.irs.gov/payments. At the IRS.gov website you’ll be given the following payment options:
6. Offer in Compromise with IRS
The IRS also has a site where you can see if you qualify for an “Offer in Compromise” to settle your tax debt for less than the full amount. Check that out here.
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Reach out to us today for a free consultation.