If you’re scrambling to file your taxes before the deadline, you’re not alone. Each year, millions of Americans request a tax extension, which gives you an extra six months to file your return to the IRS. A valid tax extension moves your filing due date from April 15 to October 15.
More than 20 million taxpayers filed for an extension in 2024, according to IRS estimates. In fact, it might even make sense to file an extension if you expect to file your return on time.
“You should consider filing an extension as part of your tax routine, especially if you have a complicated tax situation or might need more time waiting on tax forms, such as a Schedule K-1,” says Atiya Brown, a certified public accountant and owner of The Savvy Accountant in Mansfield, Texas.
But if you might need your 2024 tax return for other reasons, those deadlines should be taken into account when deciding whether to file an extension.
“Be sure to consider external deadlines, such as financial aid applications or bank requirements, where a tax return may be needed. This could be a case where filing by April 15 is needed,” says April Walker, lead manager for tax practice and ethics with the American Institute of CPAs in Raleigh, N.C.
Here are the pros and cons of filing a tax extension this tax season.
Pros of filing a tax extension
Extra time to file
Filing for a tax extension gives you more time to file your taxes. Instead of rushing to meet the April 15 tax deadline, taxpayers can take until October 15 to complete their tax returns.
“If information is missing or there are circumstances that are not conducive to gathering all of the data needed to file a complete and accurate return, filing an extension is often less expensive than rushing to file and then determining an amended return is needed later,” Walker says.
Although tax extensions typically apply to federal tax returns, state requirements vary. Some states automatically grant additional time if a federal extension is filed timely, while others may require a separate state filing.
Keep in mind that filing a tax extension only gives you more time to file your tax return — it doesn’t give you more time to pay your tax bill (more on this in the “cons” section, below).
More time to fund some retirement plans
Filing a tax extension can also extend the funding period for some retirement plans. In some cases, the additional time to fund retirement plans can help with cash flow planning, Walker says.
If you own a business and want to fund a SEP IRA, the IRS allows you to do so by the extended due date of your business taxes. Business owners can contribute up to $69,000 to a SEP IRA in 2024 and $70,000 in 2025.
Sole proprietors who report their income and expenses on Schedule C and file a valid tax extension will have until Oct. 15, 2025, to contribute to their SEP-IRA for the 2024 tax year. Note, however, that the extended due date varies depending on how the business files its tax return.
Keep in mind that a tax extension does not extend the deadline for funding an individual retirement account (IRA). The deadline to contribute to a traditional or Roth IRA for the 2024 tax year is April 15, 2025.
Avoid failure-to-file penalties
Filing an extension prevents the IRS from imposing the costly failure-to-file penalty, which is assessed if you fail to file your tax return by the deadline. The failure-to-file penalty is a hefty 5 percent of your unpaid taxes every month, up to a maximum penalty of 25 percent.
While a tax extension does protect you from failure-to-file penalties, you’ll still face failure-to-pay penalties and interest on any unpaid taxes until the balance is paid in full. The failure-to-pay penalty, however, is 0.5 percent of the unpaid balance every month — much lower than the failure-to-file penalty.
Cons of filing a tax extension
No extra time on your tax bill
While an extension gives you more time to file, it doesn’t give you more time to pay. Any taxes owed must be paid by the original due date, generally April 15, to avoid potential late payment penalties and interest.
“If you owe, you should pay with your extension filing. Doing so will reduce or eliminate any interest and penalties you incur as those are calculated based on the original filing deadline date,” Brown says.
If you’re not sure what you owe, you have this option: Pay 100 percent of your 2023 tax bill — or 110 percent of your 2023 tax bill if your adjusted gross income was $150,000 or more ($75,000 or more if you filed using the married filing separately tax status).
If you pay that amount by the April 15 deadline, then no matter what your 2024 tax bill ultimately ends up being, you won’t owe underpayment penalties. Or, if you prefer, there’s a different safe harbor: Pay 90 percent of your 2024 tax bill by April 15 — that’s also a way to make sure you avoid underpayment penalties.
Delayed tax refund
One major drawback of filing a tax extension is that taxpayers expecting a refund must wait longer to receive it.
Due to the recent IRS employee layoffs and the Trump administration’s plan to slash even more IRS staff, some experts say that taxpayers who expect to receive a tax refund should file as soon as possible. That said, tax professionals haven’t reported widespread processing delays.
“Despite the IRS staffing reductions, my clients haven’t experienced unnecessary refund delays,” Brown says. “However, I always encourage my clients to file their returns as quickly as possible if they want timely refunds.”
More time to procrastinate
While filing a valid tax extension provides more time to submit your tax return, it can also cause you to procrastinate even more. The extra time may cause some taxpayers to delay gathering their tax documents, and to push their tax returns further down the “to-do” list.
But if you file a tax extension, it’s a good idea to start gathering your tax documents sooner rather than later and think about the best way to file — whether using tax software, a tax preparer or one of these five ways to file your taxes for free — to meet your new tax deadline. Failing to file by the extended deadline may result in additional penalties.
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How to file a tax extension
Filing a tax extension is easy and free. You can file an extension online or by mail. Either way, you want to use Form 4868.
You can file Form 4868 in a few different ways:
- For free, using IRS Free File online. Even if your income makes you ineligible to use Free File to file your tax return, you can still use Free File to file an extension for free.
- Through a tax professional, such as a certified public accountant or enrolled agent.
- By snail mail. The IRS considers the extension valid as long as the form is postmarked by the due date, April 15, 2025. It’s wise to send your Form 4868 by certified mail to have proof of submission.
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