You may need more time this year to fully prepare and file your taxes with the IRS. That's why the government gives individuals the option to file a tax extension. A tax extension gives individual taxpayers an extra six months to submit their tax return, and allows them to pay an estimated amount of their tax liability ahead of time, while still giving them an extra few months to "officially" file.
It’s important to remember that even with an extension, any tax payment owed is still due on the day of the tax deadline. Even if you do not know your exact tax liability, you are required to make an estimate and pay this amount to the IRS.
How do I file a cryptocurrency tax extension?
You can file an extension with the IRS through one of the following methods:
Filling out IRS Form 4868 by hand and mailing it to the IRS - more info can be found here
Using IRS Free File to electronically request an extension
Making an extension payment through the ‘Direct Pay’ feature on the IRS website. When you make an extension payment to the IRS through this method, you are considered to have sufficiently filed for an extension and do not have to file a separate extension form.
Using TurboTax or another tax software
What's the deadline for filing an IRS tax extension?
The deadline for filing an extension is April 15, the same day as the tax filing deadline.
What if I pay too much or too little in estimated taxes?
If you underestimate your tax liability, you’ll simply need to pay the IRS the remainder of what you owe, plus any potential penalties and interest.
If you overestimate your tax payment, the government will refund any money they owe you once you file your tax return.
Can I electronically file my tax extension?
Yes. You can electronically file a tax extension for free with the IRS using one of the processes described here.
What happens if you don’t report cryptocurrency on your taxes?
Tax evasion is considered a felony, and the IRS can track your cryptocurrency transactions with the help of a service like Chainalysis. That's why it's important to use a tool like CoinLedger to keep track of your estimated tax liability for the year before filing an extension.