For many taxpayers, the April 15, tax deadline can feel overwhelming. But did you know that filing an extension is not a bad thing? Many people assume that filing an extension will trigger an IRS audit or cause penalties, but in reality, an extension can be a smart financial decision when used correctly.
This guide explains everything you need to know about filing a tax extension for 2024, including how it works, why it may be beneficial, and what it does (and doesn’t) do for your tax situation.
Filing an Extension? What You Need to Know Before the Deadline
What Is a Tax Extension?
A tax extension is a formal request to the IRS for more time to file your tax return. If approved, an extension moves your tax filing deadline from April 15, 2025, to October 15, 2025.
However, a tax extension only extends the time to file your return—it does not extend the time to pay any taxes owed. If you owe taxes, you still must estimate and pay them by April 15 to avoid penalties and interest.
How to File a Tax Extension
Filing an extension is a simple process and can be done in one of three ways:
- Electronically through IRS Free File – Many tax software programs allow you to submit Form 4868 online for free.
- Through a Tax Professional – Your CPA or tax preparer can file an extension on your behalf.
- By Mail (Paper Filing) – Complete IRS Form 4868, print it, and mail it to the IRS before the April 15 deadline.
Once filed, the IRS will automatically grant an extension as long as it is submitted by the deadline—there is no approval process required.
Common Misconceptions About Filing an Extension
Many taxpayers avoid filing an extension due to misconceptions about what it means. Here’s the truth behind some of the most common myths:
Myth #1: Filing an Extension Increases Your Risk of an IRS Audit
Reality: There is no evidence that filing an extension increases audit risk. In fact, rushing to file with mistakes is more likely to trigger an audit than taking extra time to ensure accuracy.
Myth #2: Filing an Extension Means You Can Delay Paying Taxes
Reality: A tax extension only postpones the filing deadline, not the payment deadline. If you owe taxes, you must estimate and pay what you owe by April 15 to avoid penalties and interest.
Myth #3: Filing an Extension Looks Bad to the IRS
Reality: The IRS grants millions of extensions every year. Many high-net-worth individuals and business owners routinely file extensions as part of their tax planning strategy.
Myth #4: You Should Only File an Extension If You Have a Complicated Tax Return
Reality: While complex tax situations may require an extension, anyone can file one if they need extra time to gather financial documents, claim deductions, or avoid filing errors.
When Should You Consider Filing a Tax Extension?
While not necessary for everyone, filing an extension may be a smart choice if:
- You are missing important tax documents (e.g., K-1s, 1099s, W-2s).
- You experienced a major life event (e.g., marriage, divorce, new business).
- You want to maximize deductions and credits but need more time to gather expenses.
- You have a complicated tax return and need additional time for review.
- You plan to contribute to a SEP IRA or certain retirement accounts—an extension allows extra time to make deductible contributions.
📌 CPA Tip: If you expect to owe taxes, estimate your liability and make a payment with your extension filing to minimize interest and late payment penalties. Click here to access the IRS Payments site.
How to Avoid IRS Penalties When Filing an Extension
To help you stay compliant, follow these steps:
- File Form 4868 before April 15 – This grants a six-month extension until October 15.
- Estimate and pay any taxes owed – Use last year’s tax return as a guide.
- Double-check deductions and credits – More time to file means you can maximize tax savings.
Final Thoughts: Filing an Extension Is a Smart Tax Strategy
Filing a tax extension is not a bad thing—it’s a smart financial move when used strategically. It allows extra time to review for accuracy, reduce errors, and maximize deductions, all without increasing IRS scrutiny.
If you need help filing an extension or estimating your tax liability, our team at Beckley & Associates, a trusted advisory, tax and accounting CPA firm in Plano, TX, can assist you.
Contact us today to help you meet the deadline and avoid penalties.