Not ready to file your 2025 federal income tax return by April 15? You can request an automatic extension using Form 4868. This gives you until October 15 to file without facing the failure‑to‑file penalty. But remember: an extension delays filing, not payment. If you owe taxes, you must estimate and pay by April 15 to avoid penalties and interest.
Filing vs. Paying
An extension protects you from late‑filing penalties, but it does not excuse late payment. Project your tax liability and pay what you owe by the deadline to minimize costs.
How IRS Penalties Work
- Failure‑to‑File Penalty: 5% per month (or partial month) of lateness, up to 25%. If your return is more than 60 days late, a minimum penalty of $525 applies.
- Failure‑to‑Pay Penalty: 0.5% per month (or partial month) of unpaid taxes, up to 25%.
If you miss both filing and payment deadlines, penalties combine. For the first five months, the combined penalty is 5% per month. Over time, penalties can reach nearly 47.5% of the unpaid balance.
Minimizing Penalties
- File for an extension by April 15 to avoid the failure‑to‑file penalty.
- Pay as much as possible by April 15 to reduce the failure‑to‑pay penalty.
- Consider an installment agreement if you cannot pay in full. This may lower penalty rates and help avoid liens or levies.
Additional Considerations
- Fraudulent failure to file can trigger harsher penalties.
- Penalties may be waived if you show “reasonable cause,” such as illness or family emergencies.
- Even if you pay on time, you may face an underpayment penalty if you didn’t pay enough throughout the year.
- Interest accrues on unpaid taxes at the federal short‑term rate plus three percentage points.
- Taxpayers abroad automatically receive a two‑month extension to file, but must still pay by April 15.
Don’t Wait to Act
If you’re not ready to file, submit an extension and pay what you can by April 15. This simple step can save you from costly penalties and interest. Filing an extension is straightforward, but estimating taxes owed can be complex. Seek professional guidance to ensure accuracy and compliance.