Tax Extensions: Busting Common Myths and What You Need to Know

05 May 2025 Tax Extensions: Busting Common Myths and What You Need to Know

Authored by Alexander Zacher

Now that the busy tax season is a few weeks behind us, we may have filed an extension on your tax return for many of you—for good reason. Maybe you’re still waiting on key documents like a pass-through entity’s K-1 or corrected forms, or you simply need more time to gather all your paperwork. Whatever the reason, tax extensions are a helpful tool that gives you more time to file your return accurately.

That said, providing any remaining documents to your tax professional as early as possible is always a good idea, even if you’ve filed an extension. The sooner everything is in, the sooner your return can be completed—and filed.

If you’ve ever seen the show MythBusters, you know how satisfying it is to get to the bottom of what’s fact and what’s fiction. So, in that spirit, let’s bust some common myths about IRS extensions—and clarify exactly what an extension is (and isn’t).

What is a tax extension?

A tax extension is simply a formal request to extend your filing deadline, typically by six months, moving the due date from April 15 to October 15 for individuals. Remember that the extension request must be filed by the original due date of your return, typically April 15. Some states follow the federal rules to some extent, although each state has its own procedures & rules. (Don’t worry—we handle state filings for you, too.)

Why file an extension?

Filing an extension helps you avoid the late filing penalty, which can be steep. The IRS charges 5% of the unpaid taxes per month (or part of a month) that a return is late, up to a maximum of 25%. By filing for an extension, you protect yourself from these penalties if the return is submitted within the extension period.

Common Tax Extension Myths: Debunked

Myth #1: An extension gives you more time to pay

❌ False.
A tax extension only gives you more time to file, not to pay. Any taxes owed are still due by April 15 (for federal individual returns). You may be subject to late-payment penalties and interest if you pay after that date.

However, if you expect a refund (and receive one when you file), no payment is due, and no penalties apply.

Myth #2: Filing an extension is bad for taxpayers

❌ False.
Extensions are not a bad thing—in fact, they’re often a smart move. They give you more time to gather necessary information and ensure accuracy, helping you avoid filing penalties. Submitting an extension is simply a safeguard. Even if you file well before the October deadline, the extension gives you peace of mind and flexibility.

Myth #3: Filing an extension increases your risk of an IRS audit

❌ False.

Filing an extension does not increase your chances of being audited. The IRS selects returns for audits using a variety of methods, including:

• • • • • • Discriminant Information Function (DIF): This computerized system scores returns based on various factors, with higher scores more likely to trigger an audit.
          • Abusive tax avoidance transactions: If the IRS identifies high-risk tax avoidance schemes, they may audit these returns.
          • Information matching: Discrepancies between the information reported on your return and information the IRS receives from third parties (like employers or financial institutions) could trigger an audit.
          • Large corporations and high-income earners: The IRS also prioritizes auditing larger entities and higher-income individuals due to the complexity of their returns.

In fact, some tax professionals argue that filing an extension decreases the likelihood of an audit, giving you more time to file a complete & accurate return. Regardless, no evidence suggests an extension impacts your audit risk.

Myth #4: You need a reason to file an extension

❌ False.

The IRS doesn’t require any explanation. Per Form 4868 instructions: “You don’t have to explain why you’re asking for the extension.” You simply need to file the form by the regular tax deadline.

In Summary

Filing an extension isn’t something to worry about—in fact, it’s often the responsible thing to do. Plus, we totally take care of this for you, so you don’t have to. It allows you to file a complete and accurate return while avoiding late-filing penalties. Remember: the extension gives you more time to file, not pay.

As one of our valued clients, you don’t need to worry about filing the extension yourself. If we haven’t already filed your return by the original due date, we’ve automatically taken care of filing the extension for you. Now is the perfect time to start wrapping up your documentation. The earlier we receive your information, the sooner we can finalize your return and cross taxes off your to-do list.