The season to file taxes can be dreadful and draining. Whether your firm sticks to the calendar year or the fiscal year- it might not be convenient at all times. This is where the Internal Revenue Service (IRS) comes into being to help you out. It allows non-profit organizations to extend their deadline by filing IRS Form 8868.
Usually, in cases of non-profit organizations, Form 990 is filled upon an annual basis with the IRS. It is done either before the 15th day of the 5th month. However, they can also get the chance to extend this by 6 months. This is appropriate for people who need more time, without putting themselves at the risk of missing the deadline.
Just like the other IRS forms, the 8868 one may seem difficult at first, but in this blog, we will help you by giving a step-by-step guide on How To Fill The IRS Form 8868 and apply for an extension.
How Different is IRS Extension IRS Form 8868 from other forms?
From 8868 was initiated with the aim of the IRS offering an automatic extension of 3 months for the entity that had applied for it. However, post the amendments of January 2022, the IRS changed the time period to 6 months for all exempt nonprofits. Hence, if any NPO is trying to extend their tax filing deadlines, then E File IRS Form 8868 is the one to be used.
However, IRS extension form 8868 can be filed by organizations that fill out the following forms as well:
- Form 990 or form 990-EZ for tax returns
- Form 990-BL for the report and pay required taxes
- Form 4720 for excise taxes
- Form 990-PF for listing their assets, financial activities, trustees, and officers. It also should release a complete list of grants rewarded.
- Form 990-T for disclosing any unrelated business income, proxy tax liability. It is also for claiming a refund of income tax paid by a real estate investment trust. (REIT)
- Form 1041-A for any charitable deduction claims
- Form 5227 for Charitable Remainder Funds, pooled income funds, and split-interest trusts if any
- Form 6069 for tax-exempt black lung benefit trusts and to calculate maximum allowable income tax deductions
- Form 8870 for reporting premiums paid on life insurance, annuity, and personal benefit contracts.
When is the Correct Time to e-file IRS form 8868?
The IRS allows NPOs to file their taxes either according to the fiscal year or as per the calendar year. This allows them to either file their taxes on 17th May (in the case of the calendar year) or on the fifteenth day of the fifth month (in the case of a fiscal year). In case any NPO is unable to file their forms within the due dates mentioned, they are allowed to get a 6-month extension to file their tax returns.
To get considered for this extension, it is important for Non-Profit Organisations to e-file IRS Form 8868 and pay any taxes due within the original date.
It is also important that this form is sent separately and not attached to the tax return at the time of filing.
You May Also Read: IRS Form 1040
What are the steps to file IRS Extension Form 8868?
Filing an IRS extension form 8868 can be quite confusing, which is why we have brought to you a step-by-step guide to help you understand it in the most simplified version.
We suggest that in order to understand the form in the best way possible, you might want to open the file on the side and take a look at it simultaneously as you read all these instructions.
It is always important to feed in your basic information and that starts with the name of the organization which you should not miss.
Adding to the basic information is also the location of your organization which needs to be updated while filling the form out.
City, State, Zipcode
To complete your basic information part of the form, you must also make sure to include the city, state, and zip code information about the location of your organization.
This is the code that is present on the form next to the tax return that you will be filing at the end of the extension.
It is to be noted that this code needs to be fed in, correctly and hence carefully.
Taxpayer Identification Number (TIN)
Every organization has its own unique TIN or EIN. This is included in the tax-exempt letter that the organization receives from the IRS.
Tax Exemption Details
In the end, you will be required to address the timing of the extension and the accumulated amount of the taxes that are to be paid.
Here, you must feed the exact dates of your 6-month extension. You will also be required to enter whether your organization is following a fiscal calendar or a yearly calendar.
If you enter a time period of fewer than 12 months, then you must check on the applicable reasons.
- Initial return
- Final return
- Change in the accounting period
Line 3a and 3b
This line can be confusing, but make sure to check the tax return that you are filing for. Read the instructions carefully, and enter the details of taxes to be paid, and non-refundable credits. If the amount is 0, then you have to enter that in this line. You can also fill in any overpayment from the previous years that can act as your credit.
You May Also Read: IRS Form 4506t
In this line, you will be subtracting line 3b from 3a. This amount is the balance due from your taxes. You can avoid paying any interest or penalties, by including this amount with IRS extension form 8868.
Hopefully, this article helped you to understand how to file for an extension using IRS Form 8868. As you have read above, the steps are small, simple, and quick. However, you must be aware of the changes in taxes that may affect your organization and your donors.
You can visit the IRS website and their resources to file for an extension of your tax returns.
Frequently Asked Questions
Q1: Can I get extensions for multiple returns at a time?
Ans: You will be required to fill a separate IRS Form 8868 for each individual return that you need an extension for.
Q2: Will I be penalized if I am unable to pay taxes by my original due date?
Ans: You are expected to pay the IRS Form 8868 within the due date. However, if you are unable to do so, you will be charged with additional interest. Ideally, an amount of 0.5% to 1% is charged each month.
Q3: Can I mail the IRS Extension form 8868?
Ans: The IRS accepts the extension form 8868 by mail and via email as well.
Q4: How can I share my IRS extension form 8868 via mail?
Ans: You can share your IRS extension form 8868 via mail to the following address:
- Department of the Treasury
- Internal Revenue Service Center
- Ogden, UT 84201-0045
Q5: Does the return code vary with each form type?
Ans: Yes, the return code does vary with each form type, and hence the numbers must be referred to, carefully and be entered accordingly.