What's the purpose of filing a tax extension if you still have to pay by the deadline?

So I'm looking at my calendar and realizing April 15th is coming up fast. I know I can file an extension for my taxes, but I'm really confused about one thing... If I still have to pay what I owe by the original deadline anyway, what's the actual benefit? Like, doesn't that mean I'd need to calculate everything to figure out what I owe by April 15th regardless? If I'm doing all that work anyway, why wouldn't I just finish filing the whole return instead of getting an extension? I feel like I'm missing something obvious here about how extensions work. Is there some advantage I'm not seeing? Or is it really just delaying the paperwork part while still needing to do most of the calculations anyway?

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18 comments

Daniel Rogers

•8M

The main benefit of a tax extension is that it gives you more time to gather documents and ensure your filing is accurate, even though you still need to estimate and pay what you owe by the original deadline. Extensions are especially useful if you're waiting for tax documents that haven't arrived yet (like K-1 forms from partnerships), or if your tax situation is complex and you need more time to work with a professional. They also help avoid the late filing penalty, which can be substantial (5% of unpaid taxes for each month your return is late, up to 25%). If you file an extension but pay what you estimate you owe by the original deadline, you'll only face interest charges on any amount you underestimated - not the much larger failure-to-file penalties. The extension essentially gives you breathing room to complete the paperwork correctly.

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Daniel Rogers

•8M

You don't need to calculate everything precisely - you just need a reasonable estimate based on your situation. Most people can make a good estimate by looking at last year's return and adjusting for any major changes in income or deductions this year. If you have relatively stable income and tax situation from year to year, you can often just pay the same amount you owed last year (or slightly more to be safe). The IRS understands these are estimates. Just make a good faith effort to pay what you think you'll owe.

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Ella Russell

•8M

I was in the same boat last year - totally confused about extensions! After struggling to gather all my docs by the deadline, I found this tool called https://taxr.ai that analyzes your documents and helps estimate what you owe even before you fully complete your return. It was a lifesaver for filing my extension! I used it to quickly scan my W-2s and 1099s, and it gave me a solid estimate of what I'd owe so I could pay by April 15th. Then I had the full 6 months to organize everything properly and file accurately without the rush. Really helped reduce my stress around tax season.

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Ella Russell

•8M

It does handle rental income and expenses, including depreciation calculations! You just upload your property documents and previous Schedule E if you have it, and it factors those into the estimate. For the accuracy question, my estimate was within about $200 of my final tax bill on a pretty complicated return. The system is designed to be slightly conservative, so if anything it estimated I owed a bit more than I actually did. I'd rather pay a little extra upfront than deal with penalties later. They also let you adjust the estimate if you think certain factors need to be weighted differently.

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Nathan Kim

•8M

There's another aspect no one's mentioned yet - if you need to talk to the IRS about your extension or payment estimates, good luck getting through to them! I spent HOURS on hold last year. Then I found https://claimyr.com which got me through to a real person at the IRS in about 20 minutes instead of waiting for hours. You can see how it works at https://youtu.be/_kiP6q8DX5c The agent I spoke with actually explained that it's better to file an extension if you're unsure about anything, rather than filing incorrectly and having to amend later. They confirmed that a reasonable estimate is all that's required for the payment - doesn't have to be exact. Having that confirmed directly from the IRS gave me peace of mind.

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Nathan Kim

•8M

It doesn't jump the queue exactly - it uses an automated system to continually call and navigate the IRS phone tree until it gets in line, then it calls you when it reaches a human. So you don't have to sit there listening to hold music for hours. I think not everyone knows about it yet. I only found it after complaining to a friend about my third failed attempt to reach the IRS. It's also relatively new as far as I can tell. Once you try it and experience the difference, it's hard to go back to the old way of just hoping you'll eventually get through.

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Gavin King

•8M

I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it yesterday since I had questions about my extension payment. I was literally connected to an IRS agent in 17 minutes while I was making dinner! No exaggeration - I've NEVER gotten through that quickly before. The agent clarified exactly what I needed for my extension and confirmed that my estimate method was reasonable. Would have taken me days of trying the normal way. Sometimes I love being proven wrong!

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Lucas Turner

•8M

One more thing about extensions that no one mentioned - they're super helpful if you contribute to an IRA! You can make IRA contributions for the previous tax year until April 15th, but if you file an extension, you still only have until April 15th for the IRA contribution. The extension only applies to the filing, not to things like IRA contribution deadlines. I messed this up last year thinking I had until October to make my IRA contribution for the previous year. Just don't want anyone else to make my mistake!

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Lucas Turner

•8M

Sorry for the confusion! The extension does NOT extend the IRA contribution deadline. Even if you file an extension giving you until October to file your tax return, you still must make any IRA contributions for the previous tax year by April 15th (the original filing deadline). The filing extension only gives you more time to complete and submit your tax forms - it doesn't extend other tax deadlines like IRA contributions, estimated tax payments, etc. That's the mistake I made thinking I had until October for my IRA contribution.

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