What Are The Pros And Cons Of Filing A Tax Extension?

If you need more time to file your personal tax return, you can request an extension using IRS Form 4868. This extension grants you an additional six months, shifting the deadline from April to October.

One of the biggest advantages of filing for an extension is that it provides extra time to organize your documents, avoid last-minute errors, and ensure accuracy in your return. However, a key drawback is that while you get more time to file, you do not get more time to pay any taxes owed. If you have an outstanding balance, the IRS still expects payment by the original April deadline to avoid penalties and interest.

Planning ahead and estimating your tax liability can help you minimize potential penalties while taking advantage of the extra filing time.

Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or financial advice. Consult a qualified tax professional for guidance tailored to your specific situation.

Key Takeaways

Avoid Late-Filing Penalties – Filing for an extension helps reduce penalties by ensuring you submit your return on time, even if you need extra time to gather documents.
More Time for Accuracy – An extension provides additional time to carefully prepare your return and, if you’re self-employed, to contribute to certain retirement accounts.
IRA Contribution Limitations – While self-employed individu als may extend funding deadlines for some accounts, you cannot use an extension to give yourself more time to contribute to a traditional or Roth IRA.
Follow Through is Crucial – Filing for an extension without submitting your tax return later can create confusion with the IRS, potentially leading to penalties.
No Extra Time to Pay – An extension only postpones your filing deadline, not your tax payment deadline. Any taxes owed are still due by the original April deadline to avoid interest and penalties.

Automatic Approval for Tax Extensions

In most cases, requesting a tax extension is a simple process that gets approved automatically. The IRS doesn’t require you to explain why you need extra time—just submit the form correctly, and you’re good to go.

That said, accuracy is key. Double-check your Social Security number and other details before filing. Errors in your submission, even minor ones, can lead to rare but avoidable rejections.

Additionally, certain groups, like military personnel serving overseas, receive an automatic extension without needing to file Form 4868.

Pros and Cons of Filing an Extension

Sometimes, filing for a tax extension isn’t a choice—it’s a necessity. Whether you’re still waiting for important tax documents or need extra time to organize your deductions, an extension can provide some breathing room. However, while it offers flexibility, there are both advantages and drawbacks to consider. Understanding the pros and cons can help you determine if an extension is the right move for your situation.

Pros of Filing a Tax Extension

Minimize Late Filing Penalties

The IRS enforces two types of late penalties when tax returns aren’t filed on time. First, there’s a failure-to-file penalty, which is 5% of the unpaid tax per month (or part of a month) that the return is late, up to a maximum of 25%. Then there’s the late payment penalty, which adds 0.5% of the unpaid taxes per month, also capping at 25%.

However, if you request an extension by filing Form 4868, you’ll only need to worry about the late payment penalty—and only if you owe taxes and don’t pay when filing the extension. That means an extension can help avoid the harsher failure-to-file penalty, but any outstanding tax balance will still accrue interest and penalties until it’s paid in full.

Tip: You can avoid the 5% per month late-filing penalty by requesting an extension and filing your return by the extended deadline—October 15, 2025, for 2024 tax returns. However, if you miss that extended deadline, the late filing penalty will start accruing from October 15 onward. Filing on time, even with an extension, helps you sidestep unnecessary penalties.

Protect Your Tax Refund

Some taxpayers file several years late, but it’s important to know that the IRS has a three-year deadline for claiming a tax refund. This statute of limitations starts from the original filing deadline for that tax year. Typically, the deadline is April 15, unless it falls on a weekend or holiday. For 2025, the filing deadline was April 15. If you’re owed a refund, make sure to file within that three-year window to avoid losing it.

Filing for an extension grants an extra six months to the three-year refund statute of limitations, giving taxpayers more time to claim their federal tax refunds. This can be especially helpful for those who are behind on filing but still eligible for a refund.

Maximize Contributions to Your Self-Employed Retirement Plan

Self-employed individuals may want to save for retirement by contributing to SEP IRAs, solo 401(k)s, or SIMPLE IRA plans. Filing for a tax extension gives them an extra six months to make contributions for the previous tax year.

While solo 401(k) and SIMPLE IRA plans must be established during the tax year, the actual contributions can be made up until the extended filing deadline.

If you’re an independent contractor or self-employed, you can still open and fund a SEP-IRA for the previous tax year as long as you’ve filed for an extension.

Take Advantage of Extra Time for Important Elections

Preparing your tax return involves making several important decisions. Determining your eligibility for deductions and credits—and whether claiming them is in your best interest—may require research or even guidance from a tax professional.

Filing for an extension gives you extra time to carefully evaluate your options and seek expert advice if needed.

Ensure Accuracy on Your Tax Return

The rush to meet the April tax deadline can lead to errors, whether you’re filing on your own or working with an accountant. Mistakes happen when there’s pressure to submit quickly.

Filing an extension provides extra time to carefully review your return, ensuring accuracy and completeness before submission.

Note: Filing an extension also applies to your gift tax return, giving you extra time if you’ve made significant gifts throughout the year.

Lower Your Tax Preparation Costs

Many accountants and tax preparation software providers raise their fees as the April tax deadline approaches, capitalizing on the last-minute rush. However, once the busy season passes, demand drops, and many professionals reduce their rates during the slower spring and summer months.

If you’re looking to save on tax preparation costs, filing an extension can be a smart financial move. By delaying your filing to a less hectic time, you may find lower fees, have more access to your accountant, and receive more thorough tax guidance—all without the added pressure of the filing deadline.

Taking advantage of the extended deadline allows you to make informed decisions, ensure accuracy, and potentially reduce costs while still meeting IRS requirements.

Cons of Filing a Tax Extension

Filing an extension won’t solve every tax challenge. Certain deadlines remain fixed, regardless of when you submit your return. It’s important to be aware of these non-negotiable tax deadlines to avoid penalties or missed opportunities.

No Extra Time to Contribute to an IRA

You must contribute to Traditional and Roth IRAs by the original tax deadline (usually April 15), even with a tax extension. However, if you file an extension, you can make SEP-IRA contributions until the extended deadline.

No Switching from Married Filing Jointly to Separately After the Deadline

Married couples who file jointly by the April deadline have only until April 15 to amend their return and switch to married filing separately—unless they qualify for a disaster relief exception. After this deadline, the option to change filing status is no longer available.

Mark-to-Market Election Deadline for Traders Remains Unchanged

This election must be made by the original April deadline, even if you file for an extension—unless you qualify for a disaster relief exception. The extension only applies to filing your return, not to making this election.

Risk Confusing the IRS

Requesting a tax extension may signal to the IRS that you’re required to file a return. If you later determine that you don’t meet the income requirements and choose not to file, the IRS may still send a request for your return, assuming you intend to submit one.

Tip: Even if you’re not required to file a tax return, it may still be beneficial to do so. If you qualify for the Earned Income Tax Credit (EITC)—a refundable credit—the IRS will send you the money even if you owe no taxes. However, you must file a return to claim it.

How to Request a Tax Extension

Filing a tax extension online is quick and easy. Submit Form 4868 electronically, and the IRS will send a confirmation code to verify receipt of your extension request.

Most reputable tax preparation software includes an option to file an extension for you. If you prefer, you can also mail Form 4868 directly to the IRS.

Postmark Form 4868 by the tax deadline to avoid late penalties. You can’t file extensions after this date, so submit them on time!

Conclusion

Filing a tax extension can be a strategic move for those needing extra time to organize their documents, ensure accuracy, and reduce late penalties. It provides flexibility for self-employed individuals looking to maximize retirement contributions and can even help taxpayers save on tax preparation costs. However, an extension does not grant extra time to pay taxes owed, contribute to a Traditional or Roth IRA, or switch filing statuses after the deadline. Additionally, signaling to the IRS that a return is expected may cause confusion if you don’t file one. Planning ahead and understanding the pros and cons can help taxpayers minimize penalties, claim refunds within the statute of limitations, and make informed financial decisions while avoiding unnecessary IRS scrutiny.

FAQs

1. Does filing a tax extension give me more time to pay my taxes?

No, filing an extension only extends the deadline to submit your tax return, not the deadline to pay any taxes owed. The IRS still requires you to pay by April 15 (or the designated deadline for that year). If you miss this deadline, you may face penalties and interest on the unpaid balance.

2. What are the main benefits of filing a tax extension?

Filing an extension helps you avoid late-filing penalties by giving you more time to prepare your return. It allows you to gather necessary documents, double-check your calculations, and ensure accuracy. If you’re self-employed, an extension provides extra time to contribute to SEP IRAs, solo 401(k)s, and SIMPLE IRAs. It can also reduce tax preparation fees since many accountants charge lower rates after the busy season.

3. What are the downsides of filing a tax extension?

While an extension gives you more time to file, it does not extend the deadline to pay any taxes owed. You must still make payments by the original due date to avoid penalties and interest. An extension does not allow extra time to contribute to Traditional or Roth IRAs, except for SEP-IRAs. It also does not give you more time to change your filing status, such as switching from married filing jointly to separately. If you request an extension but fail to file your return later, the IRS may assume you still need to file and could send follow-up notices.

4. Does filing a tax extension increase my chances of an IRS audit?

No, requesting a tax extension does not make an audit more likely. The IRS does not view extensions negatively. In fact, taking extra time to ensure accuracy may reduce errors that could otherwise raise red flags.

5. How do I file a tax extension, and is it automatically approved?

You can file an extension by submitting IRS Form 4868 online or by mail. Many tax preparation software programs also include an option to file an extension. The IRS

Users Also Say:

What Do Others Think About the Pros and Cons of Filing a Tax Extension?

myro****

If you file a tax extension, the Failure to File penalty does not begin accruing until the extended deadline, typically October 15. Additionally, if you pay at least 90% of your tax due by the original deadline in April and the remainder with your return, the Failure to Pay penalty does not start accruing until the extended deadline—though interest will still apply. An extension also extends the deadline for certain tax elections where regulations specify that the due date includes extensions.

Filing an extension does not mean you must wait until the extended deadline to file your return. You can still file on or before the original due date without penalty.

The 100% of the previous year’s taxes estimated payment requirement is based on the amount reported on your most recently filed return or a superseding return.