Filing an Extension on Your Personal Tax Return: What It Actually Means and What Implications It May Have

Filing an extension for your personal income tax return—typically by submitting IRS Form 4868—automatically extends the filing deadline for your federal return by six months, moving it from April 15 to October 15 for most taxpayers. However, it is crucial to understand that this extension applies only to filing, not to payment. Any tax owed must still be paid by the original due date, and failure to do so results in interest and potential penalties.

Interest accrues on unpaid taxes from the original due date until payment is made, regardless of any extension. Additionally, if you do not pay at least 90% of your total tax liability by April 15, you may be subject to a late payment penalty on the unpaid amount. However, filing an extension helps you avoid the more severe late filing penalty. 

One benefit of filing an extension is that it gives the taxpayer more time to prepare the return accurately. The taxpayer is not required to provide a reason for the extension, and the IRS will contact you only if the request is denied. Furthermore, filing an extension is unlikely to increase the risk of an audit, as it is common practice among many taxpayers. 

Another key benefit of filing an extension is that it gives the taxpayer the opportunity to correct oversights on the original return by filing a "superseding return" (a complete, corrected return) by the extended due date. A superseding return differs from an amended return in that it is treated as the original return for all purposes, whereas an amended return is not. This is important because certain elections can be made only on an original or superseding return, such as the Carry Forward Election or the Out-of-Bonus Depreciation Election. The ability to file a superseding return is a valuable option for a taxpayer. For example, if a taxpayer filed an original return and decided to carry forward the overpayment to next year’s tax obligation, but a few months later the taxpayer’s financial situation changed and determined it would be more beneficial to receive a refund instead, the taxpayer could file a superseding return to correct it. This would not be possible if the taxpayer could file only an amended return. 

Special situations may provide additional relief. U.S. citizens or resident aliens living and working abroad on the due date receive an automatic two-month extension to file and pay, but interest still accrues from April 15. Taxpayers in federally declared disaster areas may also receive automatic extensions for both filing and payment, as announced by the IRS.

A federal extension does not automatically extend your state tax return deadline. Many states require a separate extension request or have different rules, so check with your state tax agency to ensure compliance.

In summary, filing an extension gives you more time to prepare an accurate return and avoid late filing penalties, but it does not delay your payment obligation or stop interest from accruing. Always estimate and pay as much as possible by the original deadline to minimize costs, and be aware of your state’s requirements and any special relief provisions that may apply. If you have any questions about filing an extension, then please reach out to our team at (202) 455-6010 or schedule a confidential consultation.