Should I File An Income Tax Extension?

Tax season can feel like a lot, especially if you’re still gathering documents or waiting on forms. The good news is the IRS gives you an option: you can request additional time to file. Income tax extensions are common and often helpful, but it’s essential to understand what they do and what they don’t do before you decide. 

Below, we walk through how extensions work, why people file them, and what to keep in mind if you’re still considering one this year. 

What is an Income Tax Extension?

An income tax extension gives you more time to file your return. For most individuals, it moves the deadline from mid-April to October 15. 

To request one, you (or your tax preparer) submit Form 4868 to the IRS. There’s no fee, no signature required, and approval is generally automatic as long as the form is submitted by the original filing deadline. 

Extensions are available to individuals, businesses, estates, and trusts. 

An extension can be helpful if you:

• Are waiting on late documents (like a Schedule K-1)
• Have a complex return that requires more time
• Want to avoid filing with missing information
• Need extra time to organize your records

That said, one key detail matters:

A tax extension doesn’t extend your time to pay.

You still need to estimate and pay any taxes owed by the original deadline to avoid interest and penalties. 

Do I Need to Make a Payment When I File an Extension?

Most people do.

Even if you’re not ready to complete your full return, the IRS expects an estimated payment by the April deadline. Many taxpayers use last year’s information or a tax projection to help determine what to pay. 

If your situation has changed since your last return, a projection can be especially helpful, as it gives you a clearer picture of what you may owe. 

If I Have to Pay, Why File an Extension? 

There are several reasons an extension will make sense:

You’re waiting on forms

Partnerships, S-Corps, and certain investments often issue K-1s later in the season. Filing without accurate information can lead to amended returns, which adds time and complexity.

Your return is more involved this year

Major life transitions, like selling a home, starting a business, or receiving equity compensation, can add new layers to your return that take time to prepare accurately.

You run a business and need more time for your books

Small business owners often file extensions to allow time to finalize income, expenses, and depreciation.

You want more time to make eligible contributions

For specific self-employed retirement plans (like SEP IRAs), the contribution deadline aligns with the extended filing deadline. This gives you a longer window to determine what you can contribute.

How Do I File an Income Tax Extension?

If TRPG prepares your return

Our team handles the extension for you. 

If you completed a tax projection, we use that information to calculate your estimated payment. If not, we’ll ask what amount you plan to pay so we can include it with your extension filing. 

If you’re filing on your own

You can submit:

• • Form 4868 for individual returns
  • Form 7004 for most business returns

Each state has its own rules. Some accept the federal extension automatically, while others require a separate form or payment. Always check the reqirements for the states where you file. 

Avoiding IRS Penalties

Filing an extension helps prevent late-filing penalties, but not late-payment penalties. 

Here’s how the IRS assesses fees:

• • Failure to File: 5 percent of unpaid taxes per month, up to 25 percent
  • Failure to Pay: 0.5 percent per month, up to 25 percent
  • Interest: Accrues on unpaid balances until fully paid 

Even if you aren’t able to pay the full amount, making any payment reduces interest and penalties. 

What About State Extensions?

Many states follow rules similar to those of the IRS. 

However, most also require payment by the original due date. If you expect to owe state taxes, submitting an estimated payment can help you avoid additional interest or penalties. 

Is an Income Tax Extension Right for You?

Income tax extensions can offer breathing room during a busy season. They give you more time to gather documents, reduce filing stress, and help ensure your return is accurate.

If you’re unsure whether an extension makes sense for your situation, or if you’d like help estimating your payment, our team is here to help you stay organized and on track.

You can use our tax interest form to connect with a member of our tax team.