If You Aren’t Ready to Prepare Your Taxes, File an Extension

April 10, 2024

The deadline for most income tax filers falls on April 15th (or the next business day if April 15th falls on a Saturday, Sunday, or legal holiday). Therefore, you must complete returns postmarked by this date to avoid penalties.

However, if you cannot complete your return by April 15th, you can get an extension to give you more time to do so. Here’s what you need to know to file an extension.

ACTION ITEMS:

1. Obtain an automatic 6-month extension (until October 15), no reason needed.

  • File Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return
  • Estimate your full tax liability for the filing year using the information available to you
  • Enter your tax liability on line 4 of the form
  • File the form by the regular due date of your return

Tip: While Form 4868 gives you more time to file your return, it does NOT extend the time you have to pay taxes. If you do not pay the full amount of tax due on your return by the regular due date, you will also be subject to penalty and interest charges.

2. Understand the penalties associated with filing or paying late.

Paying late: If you fail to pay at least what you end up owing by the April deadline, even if you file for an extension, the late payment penalty is usually ½ of 1% of any tax (other than estimated tax) not paid by the regular due date. The IRS will charge you for each month or part of a month the tax is unpaid. The maximum penalty is 25%. The IRS may not charge the late payment penalty if you can show “reasonable cause” for not paying on time.

Filing late: You’ll usually get a late filing penalty if you either failed to submit the form for extension and filed after April 15th or filed after October 15th, no matter what. The penalty is usually 5% of the tax due for each month or part of a month your return is late. Generally, the maximum penalty is 25%. If your return is more than 60 days late, the minimum penalty is $435, or the balance of the tax due on your return, whichever is smaller. You might not owe the penalty if you have a good reason for filing late, so be sure to attach a statement to your return (not to Form 4868) fully explaining the reason.

Here’s more from the IRS on how all this works.