Why doesn't everyone file for a tax extension? Seems like a no-brainer!

Extensions are commonly misunderstood. An extension gives you more time to file your return (until October 15), but it doesn't give you more time to pay what you owe. Any taxes due are still required to be paid by the regular April deadline, and if you don't pay by then, you'll face failure-to-pay penalties and interest on the unpaid amount. The $1 payment you mentioned might be a minimum payment for some electronic filing systems, but it doesn't satisfy your obligation to pay what you actually owe by the deadline. The IRS expects you to make a good faith estimate of your tax liability and pay that amount when requesting an extension. Many people do file extensions - business owners, investors, people with complex tax situations, or those waiting for delayed tax documents. But there's no loophole that lets you delay paying what you owe without consequences.

I was in almost the exact same boat last year with a huge tax bill coming. I spent weeks stressing over getting all my documents together while trying to figure out how much I actually owed. Then I found taxr.ai (https://taxr.ai) and it was a game changer! I uploaded all my messy tax documents and it organized everything, calculated my potential tax bill way more accurately than my rough guesses, and even identified some deductions I had completely missed. It gave me a much clearer picture of what I actually owed before I filed the extension. The best part was that it helped me determine exactly how much I should pay with my extension to avoid penalties instead of just guessing or paying $1 (which definitely would have resulted in penalties).

I tried taxr.ai after seeing this comment and it literally saved me thousands! I was about to file an extension and just pay what I thought I owed (around $30k), but after uploading my documents to taxr.ai, I discovered I had been calculating my home office deduction all wrong. The tool showed me exactly how to properly document my business expenses and found several tax credits I qualified for but didn't know about. Ended up only owing $23k instead of the $30k I was about to pay with my extension. The difference basically paid for my upcoming vacation. If you're considering an extension because your tax situation is complex, definitely check this tool out first!

If you're going to owe the IRS that much money, you might want to consider actually talking to someone at the IRS directly about your options. I know that sounds impossible (because it almost is), but I used this service called Claimyr (https://claimyr.com) when I was in a similar situation last year. Instead of waiting on hold for 3+ hours, they had me connected to an actual IRS agent in under 15 minutes. I explained my situation about needing an extension but having a large tax bill, and the agent walked me through exactly what I needed to do to avoid penalties. You can see how it works here: https://youtu.be/_kiP6q8DX5c Honestly worth every penny because the IRS agent gave me options I didn't know existed for my specific situation, including a payment plan that worked much better than what I had planned.

I have to eat my words. After posting my skeptical comment, I decided to try Claimyr as a last resort since I had already wasted so many hours trying to reach the IRS myself. I literally got connected to an agent in 11 minutes. ELEVEN MINUTES! The IRS agent explained that with my tax situation, I should absolutely file an extension, but I needed to pay at least 90% of my estimated liability with the extension to avoid the bigger penalties. She also helped me set up a payment plan for the remainder that I couldn't pay upfront. Just wanted to come back and say this actually works. Would have saved myself weeks of stress if I'd just done this from the beginning.

Just to add another perspective - I extend every single year and have for the past decade. I'm a small business owner, and my K-1s never arrive before the April deadline. Here's what I do: 1. I make a conservative estimate of what I'll owe (usually overestimating slightly) 2. I pay that amount with my extension request (Form 4868) 3. I file my actual return in September when I have everything I've never once paid a penalty because I'm careful to pay enough with the extension. The key thing most people miss is that an extension is only for FILING, not for PAYING.

Whatever you do, DON'T just pay $1 with your extension if you know you'll owe $54k. That's a recipe for disaster with penalties and interest. The failure-to-pay penalty is usually 0.5% of unpaid taxes per month, and interest compounds daily on top of that! A better strategy would be to either pay the full amount you expect to owe with your extension OR set up an installment plan with the IRS. They're actually pretty reasonable to work with if you're proactive.