How To File a Tax Extension — Due Dates, Documents, and Tips for Doing Your Taxes Late

Concerned about the looming 2023 taxes due date? Scary as mid-April may be, there are ways to reduce your worry: You can file for an extension by submitting Form 4868. As long as you send it to the IRS by this year’s federal tax deadline — April 18, 2023 — the IRS will automatically extend your filing deadline to October 16, 2023. There are, however, a few important things to know before requesting a tax extension.

Extensions do not apply to paying taxes.

All Americans have until April 18 to both file and pay their taxes without a penalty. If you request an extension beyond that, you’ll have extra time to gather the information you need to file your return. You won’t get an extension on the amount of time you have to pay your taxes, however. You still must pay any taxes due by the filing deadline or face interest, penalties, and late fees, which will accrue until you pay your taxes.

To avoid penalties, estimate the amount of income tax that you think you owe and pay that amount to the IRS. You can estimate your taxes by filling out as much of your tax return as you can to get an idea of how much you probably owe.

You may pay your estimated taxes using the Electronic Federal Tax Payment System. If you can’t pay your taxes all at once, consider filing on time and setting up an installment plan with the IRS. You may also be able to request a short payment extension of between 60 to 120 days. You will still be subject to penalties, but they will be lower than failure-to-pay penalties.

A Primer on Penalties

Here’s how the IRS calculates what fines you’ll be charged.

• If you don’t pay or file your taxes by the filing deadline, you may be subject to IRS penalties.
• If you don’t file for an extension on time and you file your taxes late, the IRS may impose a failure-to-file penalty. The penalty is usually 5 percent of your unpaid taxes for each month or the portion of the month you are late. The penalty will not exceed 25 percent of your unpaid taxes.
• If you don’t pay your taxes by the filing deadline, you may be subject to failure-to-pay penalties of 0.5 percent of your unpaid taxes for each partial or full month you are late.
• If the failure-to-file and failure-to-pay penalties both apply in any given month, you will not be subject to more than a 5 percent penalty.
• If you file your return more than 60 days after the due date or extended due date for filing, the minimum penalty is the smaller of $435 or 100 percent of unpaid taxes.
• You’ll be charged interest on your unpaid balance at the federal short-term interest rate plus 3 percent. As of November 2022, the short-term interest rate is 4.03 percent.
• You can avoid penalties if you can show reasonable cause — like illness, fire, or natural disaster — for not filing or paying on time. You’ll need to show the IRS documentation of reasonable cause.

Reasons to File for an Extension

Below are some common scenarios that might lead you to ask for more time.

• Incomplete Tax Documentation. If you do not have the necessary paperwork to finish your taxes, an extension can give you extra time to gather it.
• Unexpected Events. An illness, a death in the family, and natural disasters are other common reasons people request filing extensions.
• You’re in the Military. The IRS grants members of the military who are overseas or in combat an automatic extension.
• Recharacterizing a Roth IRA. If you roll a traditional IRA into a Roth IRA, you must pay income tax on the balance at the time of conversion. But the IRS allows you to recharacterize the Roth back to a traditional IRA at any time. Still, this process can take a lot of time. If you are recharacterizing a Roth to avoid paying taxes on the balance, and the process isn’t done by the time you need to file, you may want to file an extension.
• An Overbooked Accountant. An extension not only gives you more time, it gives your accountant more time to go over your tax information and help you get the best refund possible.

A version of this article appeared in our partner magazine, The Essential Tax Guide: 2023 Edition.