Individual taxpayers, regardless of their income, can use Free File to electronically request an automatic extension of their tax return. The standard tax extension allows you to file your tax return after the usual deadline. However, it doesn't give you more time to pay any taxes you might owe. That means that if you don't pay your tax balance before the filing deadline, penalties and interest will be imposed on you.
Filing a tax extension isn't a bad thing. There is no penalty for submitting an extension. However, not paying on time or enough, or not submitting the application in full, can cost you dearly. You may have to pay a late filing penalty.
The IRS can also impose a late filing penalty of 5% of the amount due for each month or part of the month in which your tax return is late. The maximum penalty is 25% of the amount due. If you filed IRS Form 4868 on or before the tax deadline, the tax extension deadline gives you until October. In these cases, the IRS offers a period of time, usually five days, for you to troubleshoot and correct errors in your application for resubmission.
Find current percentages of federal income tax rates, capital gains tax rates, Social Security tax rates and more from the tax experts at H&R Block. The IRS can calculate the interest on your outstanding tax bill, as well as the penalties for not filing and for not paying. Filing an extension to pay your taxes gives you additional months to prepare your return no matter why you need that extra time. If you know that you will be out of the country on the day of your tax return, there is an automatic two-month extension that allows you to postpone filing and paying taxes without penalty, but you will continue to be charged interest the day after the tax filing deadline.
You may have to pay a higher late payment penalty if you didn't pay 90% of your tax liability by the April deadline. You can also get an extension by paying all or part of your estimated income tax due and indicating that the payment is for an extension using Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or a credit or debit card. If you didn't file IRS Form 4868 on or before the April 18 deadline, and you didn't file your tax return, your taxes are likely to arrive very, very late in the eyes of the IRS. If your state requires that you file an extension request independent of the federal tax extension request, you will need to contact the tax authorities in your state to check your status.
This question draws attention to a key distinction between what is a tax extension and what isn't.
