Every year, about 20 million Americans apply for a tax extension, yet many might not realize that any unpaid taxes are still due by April 15th.
While the extension lets taxpayers file their returns until October, it doesn’t push back their responsibility to settle taxes owed. If the payments aren’t made by the deadline, penalties and interest can start piling up.
“The federal tax extension—and most state extensions that rely on it—only provides you six months to complete your tax paperwork,” shared Mark Steber, a chief tax officer at Jackson Hewitt Tax Services.
He added, “It absolutely does not extend the time you have to pay taxes owed. Those are due by midnight April 15.” The IRS offers various options for taxpayers to manage their debts or establish payment plans, like short-term solutions or longer installment agreements. However, missing the full deadline can lead to increasing penalties and interest.
Experts recommend that those who can’t pay everything should still file and pay as much as they can by the deadline to mitigate additional charges. The IRS can impose numerous penalties, including those for late payments, with interest accruing daily, causing debts to balloon over time.
Typically, it’s better for individuals to file on time or request an extension if they can’t pay their tax bill in full. This is because the penalty for not filing is often steeper than for not paying.
“Ignoring deadlines is the worst approach,” Steber cautioned. “A lot of people think they can tackle it later, but penalties and interest can accumulate rapidly if you do that.”
