What to Know About Filing a Tax Extension

If you’re a small business needing to file a tax extension - here’s the good news: you don’t need to feel guilty, it’s completely normal! But you’ll want to make sure you do it right and we will guide you through the process.

  • 2023 federal tax returns are due April 15 or request an extension of time to file by April 15.

  • Filing an extension when you owe taxes only gives you more time to file, not more time to pay—your payment is still due at the tax filing deadline.

  • Filing a tax extension is free, easy and automatic. Just submit Form 4868 electronically or on paper by the filing deadline. This will give you until October 15, 2024 to file your return.

  • If you don’t pay the full amount you owe, the IRS will charge you interest on the unpaid balance until you pay the full amount. If you don’t pay at least 90% of the amount you owe, you might also be subject to a late payment penalty. The penalty is usually half of 1% of the amount owed for each month, up to a maximum of 25%.

  • If you file an extension and submit your tax return by the October 15th deadline, you will avoid the late filing penalty. Normally, if you owe the IRS and miss the tax deadline, you will be penalized 5% of your unpaid taxes for each month it’s late. Once your return is 60 days past the due date, the minimum penalty jumps to $450 or 100% of your unpaid taxes - whichever amount is lower.

  • Taxpayers who owe but can’t pay in full by April 15 don't have to wait for a tax bill to set up a payment plan. They can apply for a payment plan at IRS.gov/paymentplan. These plans can be short- or long-term.

  • Those who are self-employed must still make first quarter estimated tax payments by April 15th.

If you feel like you were scrambling this year and weren’t prepared for tax time, outsource your bookkeeping to the professionals! We can prepare accurate up-to-date books to hand off to your CPA at tax time so you can avoid late fees, stress and over paying or under paying your taxes! Get a free estimate here.