Can I Get an Extension to Pay My Taxes? Here’s What to Know
Learn how to request a tax payment extension, understand potential costs, and explore alternative payment options to manage your tax obligations effectively.
Tax deadlines can approach quickly, and if you can’t pay on time, you may wonder if an extension is possible. The IRS grants extra time to file returns, but not to pay taxes owed.
Understanding tax extensions, potential costs, and alternative payment options can help you avoid penalties.
Qualifications for an Extension
The IRS allows a six-month filing extension, moving the deadline from April 15 to October 15, but taxes still must be paid by April 15. Anyone can apply, regardless of financial situation.
Some taxpayers receive automatic extensions. U.S. citizens or residents living abroad have until June 15 to file, though interest on unpaid taxes starts accruing on April 15. Military personnel serving in combat zones typically receive a 180-day extension after leaving the combat zone.
State tax extensions vary. Some states, like California, grant automatic six-month extensions, while others, such as New York, require a separate request using Form IT-370.
Submitting an Extension Request
Filing for an extension requires submitting Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, by April 15. This can be done electronically via IRS Free File, tax software, or by mailing a paper form postmarked by the deadline.
Another option is making an estimated tax payment through IRS Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or a credit/debit card. Selecting “extension” as the payment reason automatically grants an extension without additional paperwork.
Tax professionals recommend filing an extension if key documents, such as corrected tax forms or business income details, are missing. While an extension allows more time for accuracy, taxpayers should estimate their liability and pay as much as possible to reduce interest and penalties.
Potential Fees and Interest
Failing to pay taxes on time results in penalties and interest. The failure-to-pay penalty is 0.5% of unpaid taxes per month, up to 25%. If the IRS issues a final notice of intent to levy and the balance remains unpaid for 10 days, the penalty increases to 1% per month.
Interest accrues daily based on the federal short-term rate plus 3%, which fluctuates quarterly. Unlike penalties, interest continues indefinitely until the balance is paid. Even with an extension to file, unpaid taxes from April 15 still accumulate interest.
Taxpayers who underpay throughout the year may also face an underpayment penalty. This applies if total payments, including withholdings and estimated taxes, fall short of 90% of the current year’s tax or 100% of the previous year’s tax (110% for higher-income individuals). This penalty is calculated using the federal short-term rate plus 3%.
Other Payment Arrangements
If paying in full isn’t possible, the IRS offers structured payment options. One option is an installment agreement, which allows taxpayers to pay over time. Individuals owing $50,000 or less in combined tax, penalties, and interest can qualify for a streamlined installment plan without extensive financial documentation. Businesses with liabilities under $25,000 can also apply. These agreements can be set up online, with payments automatically debited from a bank account.
For those facing severe financial hardship, the IRS may consider an offer in compromise (OIC), allowing taxpayers to settle for less than the full amount owed. Eligibility depends on income, expenses, asset equity, and overall ability to pay. If accepted, the taxpayer must stay compliant with tax filings and payments for the next five years.