1040 Extensions – What It Really Means & What Happens If You Don’t Pay
- Zachary Kamish
- Mar 19
- 2 min read
Tax season is in full swing, and if you’re feeling the pressure, you may be considering filing an extension for your 1040 tax return. But what does that really mean, and what happens if you don’t pay what you owe when you file an extension? At Kamish & Associates, we want to clear up any misconceptions and ensure you understand the financial impact of delaying your payment to the IRS.
What Does a 1040 Extension Actually Do?
Filing an extension gives you extra time to file your tax return—but it does NOT give you extra time to pay any taxes owed. The IRS grants a six-month extension, moving your filing deadline from April 15 to October 15. However, if you owe taxes, those are still due by the original April deadline.
What If You Normally Owe the IRS?
If you typically owe taxes each year and don’t pay by April 15, the IRS will start charging interest and penalties on the unpaid balance.
Interest and Penalties: What You Need to Know
Interest Charges – The IRS charges interest on any unpaid taxes starting the day after the April deadline. The rate is based on the federal short-term rate plus 3%. As of early 2024, this rate is around 8%, but it can fluctuate. Interest is compounded daily, so the longer you wait, the more you’ll owe.
Late Payment Penalty – If you don’t pay at least 90% of your total tax liability by April 15, the IRS may impose a 0.5% penalty per month on the unpaid balance. This penalty can grow up to 25% of the total amount owed.
Late Filing Penalty – If you fail to file an extension AND don’t file your return on time, the failure-to-file penalty is 5% per month of your unpaid taxes, up to a maximum of 25%. This is in addition to any late payment penalties.
What Should You Do If You Can’t Pay in Full?
Make a Partial Payment – Even if you can’t pay in full, paying as much as possible by the April deadline can reduce interest and penalties.
Set Up a Payment Plan – The IRS offers installment agreements that allow you to pay over time.
Consider an Offer in Compromise – If you qualify, you may be able to settle your tax debt for less than what you owe
Bottom Line
A 1040 extension can give you breathing room to complete your return, but it doesn’t push back your tax payment deadline. If you normally owe taxes, failing to pay by April 15 can result in accumulating interest and penalties, making your tax bill even higher.
At Kamish & Associates, we’re here to help you navigate your tax situation and minimize penalties. If you have questions about extensions, payments, or IRS penalties, contact us today!
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