Tax season is upon us and, with it, many people are scrambling to get their paperwork in order and ready to file. If you’re finding that filing your taxes is taking longer than expected or it’s more complicated than you imaged, consider filing a tax extension to buy yourself more time to get your documents in order.  Whether you’re filing business taxes or running into headaches filing your individual tax return, a tax extension provides you with extra time to get your taxes filed out.

At Steward Ingram & Cooper PLLC, our CPAs assist monthly clients with their tax prepartion needs, including requesting a tax extension. In this article, our CPAs will explain how you can file a tax extension and penalities associated with tax returns.

The Purpose of a Tax Extension

The IRS typically allows individuals, businesses, and estates to file a tax return after the deadline by obtaining an extension. A tax extension is a request for an additional six months to file your federal income tax return with the IRS. This year, with the filing deadline on April 15, an extension would move your deadline to October 15. Successfully filing for an extension means you are not assessed a late-filing penalty unless the return is not filed by the extension deadline. If October 15 falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day. 

A Tax Extension Does Not Extend the Payment of Taxes Owed

A common misconception is that the tax extension buys you additional time to pay your tax bill; it does not. The extension pushes out your filing deadline, not your payment due date. You still owe the taxes by the regular April deadline. If you need more time to pay a tax bill, the IRS offers payment plans, either through an online application or by using Form 9465, that can help you pay off your balance in increments over time.

Reasons to Get an Extension

A tax extension can be helpful for people who have these circumstances:

  • may be missing important tax documents 
  • need extra time to complete their paperwork

Filing an extension can also help you avoid incurring a late filing penalty. Note, however, that filing an extension does not extend the deadline to pay taxes. You must pay your tax bill by the original deadline or you may be subject to penalties and interest.

3 Different Ways to File a Tax Extension

You can file for a tax extension in several ways:

1. File Form 4868

Submit Form 4868 to the IRS either electronically or via mail by the April tax filing deadline. Most tax software supports Form 4868 for tax extensions. Simply follow the program’s instructions to see how to file a tax extension electronically. You will receive an electronic acknowledgment from the IRS. If you choose to mail your application for a tax extension, be sure to get proof (i.e a receipt from USPS) that you mailed it by April 15.

2. E-File Your Extension Form for Free

Use IRS Free File to electronically request an automatic tax-filing extension. This form gives you until October 15 to file your tax return. 

3. Consult a Tax Preparer or CPA

When you work with a tax preparer or certified public accountant, they can file for an extension on your behalf. This tends to reduce your stress by taking this task off your to-do list.

Is There a Penalty for Filing a Tax Extension?

There is no penalty for filing an extension. Let’s make that clear: There is no penalty for the act of filing a tax extension. However, if you are late paying money you owe on taxes or default on your tax payments, you will be penalized. In other words, if you don’t pay the entire amount you owe, the IRS will charge you interest on the unpaid balance until the full amount is paid.

You may also get a late payment penalty if you don’t pay at least 90% of what you owe. The penalty usually amounts to half of 1% of what is owed, up to a maximum of 25%. If you don’t file either your return or an extension by the deadline, you will get a late filing penalty. This will amount to 5% of what you owe for each month, up to a maximum of 25%.

Requesting a Tax Extension vs Solely Setting Up a Payment Plan

When you owe taxes to the IRS and are unable to pay in full by the due date, you have a couple of options, including setting up a payment plan or requesting a tax extension. Each option serves a different purpose and comes with its own set of advantages and disadvantages.

Setting Up a Payment Plan

A payment plan with the IRS allows you to pay your tax debt over an extended period.


  • Avoid Collection Actions: Entering into a payment plan can help you avoid aggressive collection actions, such as liens or levies.
  • Manageable Payments: You can spread out your tax debt into smaller, more manageable monthly payments.
  • Flexibility: The IRS offers different types of payment plans, including short-term (paying within 120 days) and long-term (installment agreements) options, depending on how much you owe and your ability to pay.
  • Your CPA Can Help: If you prefer, your CPA can set up a payment plan for you. However, bear in mind that your CPA is likely to charge an extra fee for this service.


  • Interest and Penalties: While a payment plan reduces penalties, you will still accrue interest and some penalties until your debt is paid off.
  • Setup Fees: Long-term payment plans may come with a setup fee, although low-income taxpayers may qualify for fee waivers or reductions.
  • Requirement to Stay Current: You must file all future tax returns on time and pay all taxes in full and on time. Failure to do so can nullify your payment agreement.

Requesting a Tax Extension

A tax extension gives you more time to file your tax return, but it does not extend the time to pay your taxes.


  • Extra Time to File: You get an additional six months to gather your documents and ensure your tax return is accurate, reducing the risk of filing errors.
  • Reduction in Penalties: Requesting an extension can help avoid the failure-to-file penalty, which is generally higher than the failure-to-pay penalty.


  • No Extension to Pay: Interest and late payment penalties will accrue from the original due date of the tax return, even with an extension.
  • Misconception of Extension Benefits: Some taxpayers mistakenly believe an extension to file also extends the time to pay, which could lead to unexpected penalties and interest.

How Tax Extensions Work If You Owe Taxes

Let’s say you can’t file your return by the tax filing deadline and you file for an extension. The IRS suggests that you estimate your tax bill and submit an estimated payment as soon as possible to prevent fees and interest from accumulating. Anything you owe after the deadline is subject to interest and a late-payment penalty. You may be able to get a reduced penalty if you pay at least 90% of your taxes owed by the deadline and pay the rest with your return. You can estimate your tax liability by using the Estimated Tax Worksheet on Form 1040-ES, by using tax software, or by working with a tax preparer.

How Tax Extensions Work If You Are Due a Refund

If you are due a refund, the IRS does not impose a failure-to-file penalty on tax returns that are filed late. It is still a good idea to file for an extension if you need extra time. For example, if you miscalculate and end up owing taxes, the tax extension will eliminate the late filing penalty.

Contact a Raleigh CPA at Steward Ingram & Cooper Today!

If you are a business owner or individual with a complex tax situation who needs more time to file or pay your taxes, consider working with a CPA who can help you file a tax extension. The CPAs at Steward Ingram & Cooper, PLLC assist with tax planning on a limited basis. We work with individuals who have complex tax needs as well as business owners who need to file taxes. To check our availability, check our website, reach out to us at  (919) 872-0866, or fill out the form below. We accept new monthly clients on a case by case basis.

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