MW How do I apply for a tax-filing extension? What if I can't pay? Your last-minute Tax Day questions, answered.

Andrew Keshner

Tuesday is Tax Day, the last day to pay any owed 2024 income taxes. It's also the final day to either file a tax return or request an extension.

Tax season is nearly done, which means last-minute filers are just beginning their sprint to submit their income-tax returns.

Tuesday is Tax Day, the last day to pay any owed 2024 income taxes. It's also the final day to either file a tax return or claim an extension.

Americans have filed more than 100 million income-tax returns since late January, according to Internal Revenue Service statistics through early April. The tax collector is expecting to have more than 140 million income-tax returns once the dust settles after April 15.

That would mean there are millions of people dashing to file their taxes right before the deadline. But an IRS deadline isn't just any deadline - there are pitfalls and penalties for people who move too fast or blow it off entirely. Here's what to know:

How do I apply for a tax-filing extension?

Getting an extension buys people six more months to file their income-tax return. This sets an Oct. 15 deadline to submit the return, but it does not extend the deadline to pay a tax bill.

The IRS says there are several ways to seek an extension, including requesting one through the IRS Free File program. Filers should estimate how much they owe and file the extension request by Tuesday to get the extra time. (Though the Free File program has an income limit of $84,000 for filing returns, there are no income rules for filing an extension through the site.)

Another option is to use the IRS payment portal and click "extension" as the payment reason; the IRS says it will send a confirmation, and extra forms don't have to be filed.

Filers can also send in Form 4868 - the document seeking the extension - through the mail via a tax preparer or tax software.

There's a chance a hard copy of doesn't reach the IRS by the Tuesday deadline. It's the postmark date that's crucial, according to Nerdwallet $(NRDS)$. Hold onto a proof of mailing for your records.

"When you submit that extension, make sure you also make a payment of what you expect to owe to avoid penalties and interest," said Andy Phillips, vice president of the Tax Institute at H&R Block $(HRB)$.

While some programs like IRS Free File allow people to request an extension for free, the cost can vary depending on the software, Phillips noted.

Generally speaking, electronic filing is the fastest way to get through to the IRS instead of mailing paper forms. That's true for extension requests and income-tax returns overall.

Some tax preparers have been moving quickly to request extensions this year or trying to avoid them altogether. The Trump administration is seeking to add to its already massive cuts to IRS staff, and these preparers want to avoid any delays in their clients' returns resulting from the agency's reduced capacity for operations and processing. That's especially true for clients mailing in hard-copy returns, they noted.

"We anticipate key operations will be stable through the remainder of tax season, but cannot predict staffing beyond the April 15 deadline," Phillips said. It's especially important for people expecting a refund to file electronically this year, as that will be the fastest way to get the refund, he noted.

Not everyone who needs more time for taxes needs to apply for an extension. The IRS routinely extends deadlines for people affected by natural disasters. After wildfires ravaged Los Angeles County in January, residents were given an Oct. 15 filing and payment deadline for their federal and state income taxes.

What if I file my taxes late?

The consequences of filing a tax return late are stiff - tougher, even, than those for failing to pay taxes. The failure-to-file penalty is 5% of the tax due "for each month or partial month the return is late," according to the IRS. The penalty builds by 5% each month to a maximum 25%.

Getting an extension avoids the failure-to-file penalty.

The nonpayment penalty is far less severe, at 0.5% of the unpaid tax. This penalty also increases as the unpaid tax drags out, but it doesn't escalate as quickly. It climbs by 0.5% increments each month.

If someone skips filing and paying, both penalties apply, though the nonpayment penalty gets subtracted from the larger nonfiling penalty.

Submitting the extension request by tomorrow helps people avoid the late-filing penalty, said Barbara Weltman, author of "J.K. Lasser's 1001 Deductions & Tax Breaks 2025." "There's zero downside to filing an extension," she said.

What if I make a mistake on my tax return?

At this point, people shouldn't rush to file a tax return without claiming all eligible credits and deductions - and gathering all the necessary documentation - just to make the April 15 deadline.

For example, teachers should track down all their unreimbursed expenses for a deduction that's worth up to $300, along with receipts to back up the costs. Gig workers should hunt the records for their work-related expenses, which can produce deductions that lower taxable income. Investors should wait for all their tax forms reporting their gains and losses.

In other words, file an extension and take the time to be complete and accurate, tax professionals say.

One incentive to get your tax return right is the opportunity to maximize any refund you might receive. The average refund is now $3,116, according to the IRS, which is slightly higher than it was last year.

Another incentive is avoiding notices of underreported income, dragged-out return processing and even the chance of an audit. As the Trump administration shrinks the IRS, it's unclear how much of the Biden-era plans to audit businesses and wealthy taxpayers remain.

But the IRS has automated systems to check that people are reporting all the tax forms the agency receives too. These computer-powered checks aren't going away, and may take a bigger role in enforcement with a smaller IRS workforce.

If someone filed their return and then realized they made a mistake or overlooked tax breaks or income, they can file an amended return. This is done with what's called Form 1040-X.

What if I can't pay my full tax bill?

The IRS will arrange repayment plans for people who cannot pay their full bill by Tuesday. There's a short-term plan under which the bill is fully paid in 180 days.

There are also longer-term installment plans. Both plans can be started online, via phone or in person. The longer-term plan has some fees associated with the setup.

"Though interest and late-payment penalties continue to apply to the unpaid balance, the failure-to-pay tax penalty rate is cut in half while an installment agreement is in effect," Phillips said. "In addition, entering into an installment agreement will pause the IRS from taking other enforced collection actions."

People who owe taxes may still have ways to shave costs, which can help in a high-interest-rate economy. One maneuver is getting a loan to repay the IRS, Phillips said. "In some cases, loan costs may be lower than the combination of interest and penalties the IRS must charge under federal law."

-Andrew Keshner

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 14, 2025 17:29 ET (21:29 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.