If I File an Extension, When Do I Have to Pay?

Many taxpayers mistakenly believe that filing a tax extension also postpones the deadline for paying taxes. This article clarifies the true purpose of a tax extension and when tax payments are actually due.

Filing an Extension

A tax filing extension provides taxpayers with additional time to submit their income tax return to the Internal Revenue Service (IRS). For individuals, this typically involves filing Form 4868, which grants an automatic six-month extension for filing. This moves the typical April 15 deadline to October 15 for most individual filers.

While Form 4868 extends the time to file, it does not extend the deadline for paying any taxes owed. The extension is generally automatic upon proper submission, which can be done electronically through tax software, by mail, or by making an estimated tax payment and indicating it is for an extension. This extension is solely for the paperwork, not for the financial obligation.

Your Payment Due Date

The tax payment deadline remains the original due date, which for most individual income tax filers is April 15. If April 15 falls on a weekend or holiday, the deadline shifts to the next business day. This deadline applies even if a filing extension has been granted.

The United States operates on a “pay-as-you-go” tax system. This means taxpayers are expected to pay most of their tax liability throughout the year. The April 15 deadline is when any remaining tax due must be settled. Taxpayers should estimate their tax liability and pay any amount due by this date to avoid financial implications.

Penalties and Interest

Failing to pay taxes by the original due date, even with a filing extension, can result in penalties and interest charges. The “failure-to-pay” penalty is typically 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid. This penalty has a maximum cap of 25% of your unpaid taxes.

Interest also accrues on unpaid taxes from the original due date until the date of payment. This interest rate is determined quarterly by the IRS and compounds daily. While filing an extension avoids the “failure-to-file” penalty, the failure-to-pay penalty and interest still apply if the tax is not paid by the original deadline.

Options When You Cannot Pay

If a taxpayer cannot pay their tax obligation by the deadline, certain options are available through the IRS. One common option is an installment agreement, which allows taxpayers to make monthly payments. Interest and penalties continue to accrue, though the failure-to-pay penalty may be reduced to 0.25% per month while an installment agreement is in effect.

Another option is an Offer in Compromise (OIC), where the IRS may agree to accept a lower amount than what is owed if the taxpayer faces significant financial hardship. To qualify, taxpayers generally must have filed all required returns and made current estimated tax payments. In cases of extreme financial hardship, the IRS may temporarily delay collection by classifying the account as “currently not collectible.” However, interest and penalties continue to accrue during this delay, and the debt is not erased.