Tax deadlines are approaching fast—are you ready? If not, you may need to file an extension. But here’s the catch: An extension doesn’t mean you can delay paying your taxes. It simply gives you more time to file your return, helping you avoid late-filing penalties and giving you breathing room to get your documents in order.
If tax season feels overwhelming, here’s everything you need to know about how to file an extension and what it means for your business.
What Is a Tax Extension?
A tax extension allows you to extend your tax return deadline by six months. For most businesses and individuals, the new deadlines are:
- For individuals & sole proprietors (1040): October 15, 2025
- For S corporations & partnerships (1120S, 1065): September 15, 2025
- For C corporations (1120): October 15, 2025
An extension moves the filing deadline but NOT the payment deadline. If you owe taxes, they are still due on April 15, 2025 to avoid interest and penalties.
Who Should File a Tax Extension?
Filing an extension makes sense if:
- You’re still waiting on key financial documents.
- Your books are disorganized, and you need more time to clean them up.
- You’ve had major life changes (business expansion, new tax laws, etc.) that require expert review.
- You want to avoid late-filing penalties.
If any of these apply to you, filing an extension could help you avoid unnecessary stress and potential penalties.
How to File a Tax Extension
Filing an extension is easier than you think. Here’s how:
- Determine Which Form to File
- Individuals & Sole Proprietors: File Form 4868
- S Corps, Partnerships, Multi-Member LLCs: File Form 7004
- C Corps: File Form 7004
- Estimate & Pay Any Taxes Due
- Even if you file an extension, the IRS expects you to pay what you owe by April 15, 2025. If you underpay, penalties and interest will apply.
- File Your Extension Electronically or by Mail
- E-file: Use IRS-approved software or have a tax professional file for you.
- Paper Mail: Send the completed extension form to the IRS before the deadline.
If you file electronically and pay online, you don’t need to submit a separate form—the IRS automatically processes your extension.
When mailing a paper Form 4868 for a tax extension, the correct address depends on your state of residence and whether you are including a payment. If you are sending a check or money order, you must use a different address than if you are filing without a payment. Using the correct address ensures timely processing and helps avoid delays.
What Happens If You Don’t File on Time?
- Late-filing penalty: 5% of your unpaid taxes per month, up to 25%.
- Late-payment penalty: 0.5% of unpaid taxes per month after April 15.
- Interest charges: Based on the IRS interest rate (currently over 8%).
Filing an extension helps you avoid the worst penalties, but paying what you owe by the deadline is still the best strategy.
Final Thoughts: Should You File an Extension?
Filing an extension can be a smart move if you need more time to get things right, but don’t make the mistake of ignoring your tax payments.
- Plan ahead,
- File properly, and
- Stay compliant.
Need help filing an extension or estimating your tax liability? Let’s talk. Schedule a Discovery Call today!
Taking this step ensures you’re on track, but why stop there? Before you file, have you explored all possible tax-saving strategies? The right approach could help you keep more of your hard-earned money.
Read next: Why Every Business Owner Needs a Smart Tax Strategy
