Tax Day 2023: Filing for an Extension? You’ll Still Need To Pay Money Today
If you file for a tax return extension before the end of the April 18, 2023, filing deadline, you’ll get an additional six months to complete your return. What you won’t get is relief from the taxes you owe.
Taxpayers who owe taxes “should pay their entire obligation, or as much as they can,” by the normal deadline to avoid penalties and interest, according to the IRS. That applies even if you file for an extension.
If you don’t owe taxes or are due a refund, you won’t have to worry about paying on April 18. Otherwise, be prepared to pay the IRS online before the end of the day.
By either filing a return on time or requesting an extension by the April 18 filing deadline, you can avoid the late-filing penalty — which can be 10 times as costly as the penalty for not paying.
The failure-to-file penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late, according to the IRS. The late-payment penalty is normally 0.5% per month. Both penalties max out at 25%. States that require you to file a tax return might also impose late-filing fees.
An extension gives you an automatic six more months to complete your full return, which means this year you will have until Oct. 16, 2023.
The quickest and easiest way to get an extension is to use the IRS’s Free File tool, available on its website. The tool lets you electronically request an extension on Form 4868, regardless of your income. To get the extension, you must use the form to estimate your tax liability and file it by the end of the day on April 18.
Other quick and free options to get an extension include using IRS Direct Pay or the Electronic Federal Tax Payment System, or by paying with a credit or debit card or digital wallet. You don’t need to file a separate Form 4868 extension request when making an electronic payment and indicating it’s for an extension. The IRS will automatically count it as an extension.
Paying as much as you can by the due date will reduce the overall amount subject to penalty and interest charges. The interest rate for an individual’s unpaid taxes is currently 7%, compounded daily. That is on top of the late-filing and late-payment penalties mentioned earlier.
The IRS will work with taxpayers who can’t pay the full amount of taxes they owe. You can also look into other options, such as paying by credit card. Most taxpayers can set up a payment plan on IRS.gov to pay off their balances over time.
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Some eligible taxpayers get more time to file without having to ask for extensions. These include the following:
- U.S. citizens and resident aliens who live and work outside of the United States and Puerto Rico get an automatic two-month extension to file their tax returns. They have until June 15, 2023 to file. However, tax payments are still due April 18 or interest will be charged.
- Members of the military on duty outside the U.S. and Puerto Rico also receive an automatic two-month extension to file. Those serving in combat zones have up to 180 days after they leave the combat zone to file returns and pay any taxes due. Details are available in Publication 3, Armed Forces’ Tax Guide.
- When the president makes a disaster area declaration, the IRS can postpone certain taxpayer deadlines for residents and businesses in the affected area. Taxpayers in certain disaster areas don’t need to submit an extension electronically or on paper. People can find information on the most recent tax relief for disaster situations on the IRS’s Extension of Time To File Your Tax Return page.
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