Introduction

The tax filing days occur on the same date every year and somehow, they always seem to sneak up on us. According to the IRS, roughly 20 million extensions were filed for 2024 taxes. That’s approximately 9% of filers! While it’s not uncommon to file for an extension, it’s important to understand the rules and guidelines for when and why you would file an extension. In this article, we will discuss filing dates, why you might file an extension, costs associated with extensions, and how to file an extension.

Filing Dates

The technical timeframe for when individuals need to file their taxes is “The fourth month after your fiscal year ends, day 15” according to the IRS website. In regular terms this simply means April 15th, unless it falls on a weekend, in which case it moves to the next business day.

For businesses, the day you need to file depends on the type of business you own.

Sole Proprietors – Due by the 15th day of the fourth month following the end of the tax year

Partnerships – Due by the 15th day of the third month following the tax year end

S Corporation – Due by the 15th day of the third month following the tax year end

C Corporation – Due by the 15th day of the fourth month following the end of the tax year, unless the fiscal year end is on June 30th, in which they must file by the 15th day of the third month.

Why File an Extension?

There can be many reasons why someone might decide to file an extension. The main reasons would be the complexity of the taxes, inability to obtain documents in a timely manner, time crunches, or simply just forgetting. Anytime you believe that you may end up running behind, you are able to file an extension to make sure you won’t incur any late filing penalties.

One often-overlooked reason for filing an extension is because of natural disasters. There are times when extenuating circumstances cause someone to need additional time due to major losses in your area from natural events such as wildfires, tornadoes, or hurricanes. In those situations, the IRS does allow for extended time for taxes. To learn more if you could be allowed an extension, check out this IRS website.

Cost of Extension

Filing an extension does not directly cost money. One trap that people can fall into is believing that filing an extension means that you do not have to pay the taxes by the tax due date. You will still need to make an estimated payment before you file the official return with the correct amount.

Late Filing Penalties

For most filers, filing late would cause a 5% penalty for each month or partial month the return isn’t filed. This can accrue to a maximum of 25% penalty. The minimum penalty for filing a return late after 12/31/25 is $525.

If you have a partnership or an S corporation, the penalty is charged each month for up to 12 months. The minimum penalty for these entities is $255 after 12/31/25.

An important consideration is that any penalty received also gets charged an additional interest penalty on top of the original penalty.

How to File an Extension

Determining your filing status depends on which form you should file. If you are filing an individual income tax return you would file Form 4868. If you are a business, you would file Form 7004. The due date for either of those forms is the same as the tax deadline. For individuals, this typically falls on April 15th, and for businesses, it can vary depending on their fiscal year end.

After filing an extension, you are given an additional six months to file your taxes. Once again, it’s important to remember that this is giving you additional time to file your taxes, not pay your taxes.

Conclusion

Filing a tax extension can be a valuable option for individuals and businesses that need additional time to prepare an accurate tax return. Whether the delay is caused by missing documents, a complex tax situation, unexpected circumstances, or natural disasters, filing an extension can help taxpayers avoid costly late filing penalties. However, it is important to remember that an extension provides more time to file a return, not more time to pay taxes owed. Understanding the filing deadlines, extension requirements, and potential penalties can help taxpayers make informed decisions, remain compliant with IRS regulations, and reduce stress during tax season.

If you need help understanding your tax filing options, Volpe Consulting & Accounting has tax professionals who would be happy to assist!