Reviews 4,000+ verified REVIEWS
Pricing plans
Compare all plans
Tax guide
Pricing plans
Compare all plans
Tax Guide
All articles

Understanding tax extensions and payment obligations 2024

Understanding tax extensions and payment obligations 2024

As tax season approaches, it's crucial for taxpayers to understand the implications of filing for an extension.

While an extension provides additional time to file your tax returns, it does not grant extra time to pay any taxes owed.

Here's a structured breakdown to help you navigate this important distinction:

Filing an extension: what does it mean?

Filing for an extension allows taxpayers until October 15 to submit their tax returns without penalties for late filing.

However, this does not affect the deadline for tax payments, which remains fixed.

Key points:

  1. Payment deadline: Taxes owed are due by the original tax deadline, typically April 15.
  2. Extension request deadline: Must be filed by April 15, 2024.
  3. Special extensions: Taxpayers in Maine and Massachusetts have until April 17 due to Patriots' Day.

Consequences of late payment

Failing to pay taxes by the due date leads to penalties and interest charges.

The specific penalties can include a failure-to-pay penalty, typically 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid, capped at 25%.

Interest is also charged on the taxes not paid by the due date, and this interest compounds daily from the due date of the return until the date the payment is made.

NB! It’s important for taxpayers to understand that these financial penalties continue to accrue until the full tax debt is settled. This can significantly increase the total amount owed if payment is delayed extensively.

Pro tip: To manage or mitigate these charges, taxpayers should aim to pay as much as possible by the original due date and consider contacting the IRS to discuss payment options or plans if the full amount cannot be paid immediately.

Who gets an automatic extension?

Automatic extensions are granted to specific groups under particular circumstances, ensuring they have extra time to file and pay taxes without penalties:

  1. Military personnel and support staff: US citizens and resident aliens serving in designated combat zones, along with eligible support personnel, receive automatic extensions to file returns and pay taxes due. This extension also applies once they leave the combat zone.
  2. Residents in FEMA disaster areas: The IRS grants automatic extensions to residents in areas designated by the Federal Emergency Management Agency (FEMA) as disaster zones. These taxpayers do not need to file for an extension or contact the IRS to receive this benefit.
  3. US citizens and resident aliens abroad: Those living outside the US, including military members, typically have until June 15 to file their tax returns. However, any taxes due are still expected to be paid by the regular April deadline to avoid penalties.

For more information on specific areas granted tax relief due to disasters and the details of these extensions, visit the IRS's Tax relief in disaster situations page.

Ines Zemelman, EA
Founder of TFX