Yes, there are downsides to filing a tax extension, primarily that it only grants more time to file paperwork, not to pay taxes owed. If you owe money, you must pay by the original April deadline to avoid interest and penalties. Other downsides include delaying potential refunds, needing to pay state taxes separately, and potentially missing out on specific, time-sensitive tax moves.
An extension gives you extra time to file, but not extra time to pay. After you file an extension, if you owe taxes when you file your return, you might also have to pay penalties and interest on the tax due.
If you need more time to file your taxes, request an extension by the April tax filing due date. This gives you until October 15 to file without penalties. Make sure you pay any tax you owe by the April filing date. The extension is only for filing your return.
Your taxes don't affect your credit scores in any way. However, taking out a loan or credit card to pay your taxes can impact your credit scores.
In this rush, the option to file for a tax extension is often seen as a last resort, the taxpayer has a lingering concern that it might raise red flags with the IRS or cause future tax problems. However, these worries are largely unfounded.
❌ False. Filing an extension does not increase your chances of being audited. The IRS selects returns for audits using a variety of methods, including: Discriminant Information Function (DIF): This computerized system scores returns based on various factors, with higher scores more likely to trigger an audit.
The biggest tax mistakes people make include filing late, math errors, incorrect personal info (like Social Security numbers), forgetting deductions/credits (like EITC), misreporting income, not signing forms, and making errors with bank details for direct deposit, all leading to delays, penalties, or missed savings, with using tax software or professionals helping avoid these common pitfalls.
If you file taxes after the October 15 extension deadline, the IRS will assess penalties and interest, primarily a failure-to-file penalty (5% per month, max 25%), plus a separate failure-to-pay penalty (0.5% per month) and daily interest on the unpaid taxes, though you can request penalty abatement for reasonable cause like natural disasters. The October deadline is for filing, not paying; if you owe, payment was due in April, so you'll likely face both penalties and interest until you file and pay, but you won't be penalized if you're due a refund.
Cons of filing a tax extension
According to the IRS, as of 2023, the interest rate is currently 7% compounded daily. Plus, the late payment penalty is 0.5% per month, which maxes out at 25%.
If you use software to file an extension online, you'll get confirmation that your extension was accepted. The IRS does not confirm extension requests sent by U.S. mail or an authorized private delivery service. But they will notify you if they deny your extension.
However, the IRS does grant you an automatic extension to file your taxes every year, as long as you complete Form 4868. Common reasons for requesting an extension include a lack of organization, unanticipated events or tax planning purposes.
Do I Need to File an Extension If I Don't Owe? If you are due a refund, you do not need to file an extension. The IRS allows up to three years from the original filing deadline to submit your return and claim your refund.
Filing a tax extension can give you valuable time to finalize your return, maximize deductions, and ensure accuracy. However, it doesn't exempt you from paying your taxes on time. To avoid penalties and unnecessary costs: Pay at least 90% of your estimated tax liability by April 15.
October 15 is the deadline for most U.S. individual taxpayers who requested an extension by the regular April deadline (usually April 15) to file their tax return. Think of it this way: the April deadline is for everyone. The October deadline is specifically for those who asked for and were granted extra time.
With a 700 credit score (considered "Good"), you're well-positioned to get approved for most major loans like mortgages, auto loans, and personal loans with more competitive interest rates and terms than someone with a lower score, plus you'll qualify for better rewards credit cards and may even see lower insurance premiums. You can access a wide range of financial products, but to get the best rates, scores above 740-760 are often needed.
But here's generally what you can expect. No penalty if you're getting a tax refund. However, you must file your 2025 taxes by April 15, 2029 (or October 15, 2029 if you filed an extension). After that, any unclaimed tax refund gets turned over to the US Treasury.
You may request up to an additional 6 months to file your U.S. individual income tax return. There are three ways to request an automatic extension of time to file your return. You must request the extension of time to file by the due date of your return to avoid the penalty for filing late.
If you filed for online extension with Form 4868, you should have received an online confirmation number to confirm extension for your records.