How to Use Form 1127 for an Extension of Time to Pay Taxes

by Contributor ; Updated July 27, 2017

How to Use Form 1127 for an Extension of Time to Pay Taxes. If you just can't get your taxes prepared and filed on time, you can ask the government for an extension. The usual process still requires that you pay an estimate of the taxes you owe, so if the problem is that you don't have the money to pay the tax, you can consider IRS Form 1127 for an extension of time to pay. Read on to learn how to use Form 1127 for an extension of time to pay taxes.

Step 1

Know the difference between IRS Form 1127 and IRS Form 4868. Both offer extensions, but 4868 lets you pay the estimated tax with an extra six months to file your return. You don't need to explain why you are filing for a 4868 extension. Form 1127 allows you to put off paying your taxes plus interest until August without penalties but under strict legal requirements.

Step 2

Get a copy of IRS Form 1127. It's available from your tax preparer or the Internal Revenue Service. You aren't likely to find the form at places such as public libraries that have other, more common IRS documents. Read it carefully to make sure you can provide all the information they want before you decide if it's the best course for you.

Step 3

Prepare your financial information. IRS Form 1127 requires you to list detailed information about your assets and liabilities at the end of the previous month, plus an itemized list of money you've received and spent over the past three months. The IRS wants to make sure you can't pay your taxes on time, so they'll go over all your documentation very carefully.

Step 4

Explain why you can't borrow the money. The government really wants you to pay, so your reason for not coming up with the tax money needs to satisfy IRS agents reviewing your Form 1127. They want you to prove "undue hardship" not just inconvenience.

Step 5

Start early. IRS rules say they won't consider a Form 1127 request for an extension of time to pay taxes unless you get it in before the tax deadline. If you file on April 16th, you're out of luck.

Step 6

Put your fate in the hands of the IRS District Director. That's who will decide if you get an extension of time to pay your taxes. The District Director will also let you know if there are any special requirements to get your extension, such as putting up some kind of security to assure payment.

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