If you’re not fully prepared to submit your 2025 federal income tax return by the April 15 deadline, you can request additional time by filing Form 4868. This grants you an automatic extension until October 15, helping you avoid penalties related to late filing.
However, it’s important to understand that an extension only applies to submitting your return—not to paying your taxes. If you expect to owe money, you should estimate and pay as much as possible by April 15 to reduce penalties and interest.
How Tax Penalties Work
Failure-to-File Penalty
The penalty for not filing your tax return on time is significantly higher than the penalty for late payment. It is typically 5% of the unpaid taxes for each month (or part of a month) your return is late, up to a maximum of 25%.
If your return is filed more than 60 days late, a minimum penalty—generally $525—may apply. Filing for an extension on time helps you avoid this penalty entirely, as long as you meet the extended October deadline.
Failure-to-Pay Penalty
The penalty for late payment is lower but still adds up over time. It is usually 0.5% per month (or part of a month) on the unpaid amount, up to 25%.
For example, paying your tax balance in late May for an April 15 deadline could result in a 1% penalty. Even if you request an extension, paying as much as possible early helps reduce this cost.
Combined Penalties
If you neither file nor pay by April 15, both penalties may apply. In that case, the failure-to-file penalty is reduced to 4.5% per month, making the combined penalty 5% monthly.
Over time, penalties can become substantial—reaching as high as 47.5% if left unresolved for an extended period.
What to Do If You Can’t Pay Your Taxes
If you’re unable to pay your full tax bill, the most important step is still to file for an extension. This prevents the more severe failure-to-file penalty.
After that, pay as much as you can as soon as possible. You may also consider applying for an installment agreement, which can lower your penalty rate and help you avoid more serious consequences like liens or levies—provided you stay compliant with payments.
Additional Factors to Keep in Mind
Possible Penalty Relief
In some cases, the IRS may waive penalties if you can demonstrate “reasonable cause,” such as a serious illness or a death in your immediate family. However, penalties tied to fraud can be significantly higher.
Underpayment Penalty
Even if you pay your taxes by April 15, you could still face an underpayment penalty if you didn’t pay enough throughout the year via withholding or estimated payments.
Interest Charges
Interest is charged on unpaid taxes in addition to penalties. For individuals, the rate is based on the federal short-term rate plus three percentage points and is adjusted quarterly.
Special Rules for Certain Taxpayers
Taxpayers living outside the United States or serving in the military abroad automatically receive a two-month extension to file. However, any taxes owed are still due by April 15.
Don’t Delay Taking Action
If you’re not ready to file your tax return, requesting an extension and paying what you can by April 15 is the best way to limit penalties and interest.
While filing an extension is straightforward, estimating your tax liability can be more complex. Seeking professional guidance can help ensure accuracy and reduce financial risk.