If you’ve requested an extension for your 2023 tax return but have yet to finalize your filing, the deadline is fast approaching. Mark your calendars: the last day to submit your returns is Tuesday, October 15. Missing this date might lead to penalties.

The IRS permits individuals to apply for a six-month extension beyond the typical April 15 deadline, which grants additional time to gather necessary documents. However, it’s essential to note that any owed taxes remain due in April, where interest and late fees will begin to accumulate. If you find yourself in a situation where you haven’t both filed and paid your dues, it’s vital to devise a plan to address both matters promptly.

The failure-to-file penalty is set at 5% of the unpaid taxes for each month or a fraction thereof that the return is delayed, with a maximum cap of 25% of the total tax owed. On the other hand, the failure-to-pay penalty incurs a charge of 0.5% of unpaid taxes per month or partial month that the obligation remains unsettled, also capped at 25%. Furthermore, interest will continue to accrue until the total balance is settled. Although both penalties can be applied concurrently, the failure-to-file penalty will be adjusted for the amount attributable to the failure-to-pay penalty in that particular month, meaning you’ll face a maximum penalty of 5% rather than 5.5%.

The IRS provides options for both short-term and long-term payment plans for those who can’t settle their taxes by the April 15 deadline, offering an extension of either 180 days or up to 72 months. Even though interest will still apply, the failure-to-pay penalty is reduced by 50% as long as you remain compliant with your payment arrangement. Setting up this plan can easily be done online.

Tax Filing Extensions Due to Natural Disasters

For most taxpayers who secured a filing extension, the deadline is nearing, but certain exceptions apply to individuals in disaster-stricken areas, like those impacted by Hurricane Helene. Taxpayers residing in or running businesses in Alabama, Georgia, North Carolina, South Carolina, and parts of Florida, Tennessee, and Virginia that received accepted extensions now have until May 1, 2025, to complete their 2023 tax filings. This extension automatically applies to the 2024 returns as well.

Currently, individuals in a total of 25 states are eligible for extensions beyond the October 15 deadline. For further details on eligibility, the IRS has comprehensive information on its website.

It’s crucial to remember that, akin to the standard extension, disaster-related extensions do not eliminate the requirement to pay taxes on time. They solely pertain to the submission deadline of your tax return.