How To File a Tax Extension: Step-by-Step Guide to Filling Out Form 4868

Tax season brings an often-familiar and understandable sense of stress. You might be waiting on outstanding documents, finalizing year-end bookkeeping, or simply handling a more complicated tax situation than usual.

For small business owners and individuals with complex finances, the deadline often arrives before the paperwork. But accuracy is worth the wait, and rushing is rarely the right answer.

In those situations, understanding how to file a tax extension (and what you actually get from one) is crucial. In this article, we’ll cover the ins and outs of filing for such an extension to help you avoid potential penalties, including key deadlines, simple submission methods, and how to navigate IRS Form 4868.

This blog post is offered for general information purposes only. It does not constitute, and is not a substitute for, legal or tax advice.

Understanding tax extensions

A tax extension is a formal request to the IRS for extra time to submit your federal individual tax return. If filed correctly, this generally provides an automatic six-month extension, moving the deadline from April to October.

It’s vital to understand, however, that an extension applies only to filing your return — not to paying taxes owed. If you owe taxes, the IRS expects payment by the original due date, and unpaid balances may trigger penalties and interest.

The IRS imposes two primary penalties:

• Failure-to-file penalty: Typically, 5% of unpaid taxes per month (or part of a month),up to 25%.

• Failure-to-pay penalty: Typically, 0.5% of unpaid taxes per month (or part of a month) up to 25%.

If both penalties apply in the same month, the Failure-to-file penalty is reduced by the Failure-to-pay penalty amount, so the combined penalty is 5% for that month in most standard scenarios. Failure-to-pay penalties can vary (for example, they may be lower with an approved payment plan or higher after certain IRS notices), and the Failure-to-file penalty has a "minimum penalty” rule if you are more than 60 days late.

On the whole, filing an extension on time can protect you from the costly 5% per month failure-to-file penalty, even if you can't pay the full balance immediately. While interest and the smaller failure-to-pay penalty may still apply to unpaid taxes, filing an extension is often one of the most financially sound decisions you can make if you aren't ready to file by April.

Filing a tax extension: deadlines and rules to know about

To secure an extension of time to file your federal income tax return, submit Form 4868 by the regular due date—typically April 15 (or the next business day if it falls on a weekend or holiday). A timely extension generally moves your filing deadline to October 15, giving you an additional 6 months to file – but not additional time to pay any taxes owed. Crucially, however, locking in this extension stops the clock on the steep 5% failure-to-file penalty, leaving you to manage only the much smaller 0.5% failure-to-pay penalty on any balance due.

Do not assume your federal extension automatically applies to your state return. While many states honor the federal extension, others require a separate state tax extension form or payment. Always check your specific state's department of revenue rules to avoid penalties.

Some special situations also include:

• Overseas taxpayers: U.S. citizens and resident aliens living abroad generally receive an automatic two-month extension to file their federal return, moving the deadline to June 15. However, interest typically accrues on any unpaid taxes beginning April 15.

• Military and disaster relief: Service members in combat zones and taxpayers affected by federally declared disasters often qualify for extended filing and payment deadlines announced by the IRS. 

Always check the latest IRS guidance for special cases.

What is the easiest way to file for a tax extension?

The "easiest" way to file for an extension depends on whether you also need to make a payment and what tools you already use.

For example, if you owe taxes, simply making a payment online and designating it as an extension is often the fastest route because it eliminates the need to file a separate form. Conversely, if you expect a refund, e-filing Form 4868 through your preferred tax software may be more seamless.

Option 1: Pay electronically and select “extension” (Best if you owe)

This is often the simplest method if you owe taxes. Make a payment toward your estimated income tax using Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or an approved credit/debit card processor.

When submitting the payment, select "Extension" (Form 4868) as the reason. If properly designated, the IRS generally treats this payment as your extension request, meaning you typically do not need to file a separate Form 4868.

Note: Direct Pay may require identity verification using information from a previous year's tax return.

Option 2: E-file Form 4868 (Best if you don't owe or pay separately)

You can e-file Form 4868 using tax preparation software or through a tax professional. This is fast and provides electronic acknowledgment that the IRS received your request. 

This option works well if you do not owe taxes or if you prefer to file the form electronically and make your payment separately.

Option 3: Mail Form 4868 (Backup option)

You can file a paper Form 4868 by mail. Ensure the envelope is postmarked by the regular due date of April 15th. Because paper forms can be delayed, it’s often best to send them via certified mail to have proof of timely mailing.

How to file a tax extension with Form 4868 (step-by-step)

Form 4868 is a short IRS form requesting basic identification details and tax estimates. Here’s a step-by-step guide to help you file one:

• Step 1 — Gather identity details: Provide your name, address, and Social Security number (and your spouse’s if filing jointly). Make sure this information matches IRS records exactly to avoid processing delays.

• Step 2 — Estimate your total tax liability: Enter a reasonable, good-faith estimate of your total tax for the year. If your income is similar to last year’s, you may use last year's total tax as a starting point. Otherwise, total your W-2s, 1099s, unemployment income, and other sources to calculate an informed estimate. It doesn't need to be exact, but it should be reasonable and made in good faith.

• Step 3 — Account for payments already made: Include federal income tax withholding, estimated tax payments, and any prior-year overpayment applied to this year.

• Step 4 — Calculate the balance due: Subtract total payments (Step 3) from your estimated tax liability (Step 2) to determine any amount owed. Paying this balance when you file an extension helps reduce interest and failure-to-pay penalties.

• Step 5 — Choose your submission method: File electronically or by mail. If paying electronically and properly designating the payment as Form 4868 (extension), you generally do not need to submit a separate paper form.

• Step 6 — Save your confirmation: Save the electronic confirmation number or certified mail receipt as proof of timely filing .

What to do after you file an extension

Once filed, confirm your status by saving your receipt with your tax documents.

Next, set a personal completion deadline, perhaps August, to finalize your return. This buffer allows you to address missing mortgage interest statements or resolve questions with your tax professional before the October rush.

If you couldn't pay in full, consider making partial payments to reduce interest accrual. Keep a running checklist of missing documents so you can act immediately when they arrive.

Staying secure and audit-ready during the extension window

The six-month extension period often leaves sensitive documents—like W-2s, 1099s, and K-1s—stored in email inboxes or unsecured folders, increasing the risk of data exposure. To mitigate this risk and help ensure you don’t miss the October deadline:

• Limit email transmission of sensitive data: Standard email is typically not end-to-end encrypted. Consider using secure, encrypted document-sharing tools to transmit information containing Social Security numbers or financial details.

• Streamline final signatures: The IRS permits electronic signatures on Form 8879 (the e-file authorization) when using compliant e-file systems. Secure eSignature tools like Docusign eSignature allow you to sign remotely, helping ensure timely filing before the October 15 deadline.

• Maintain a digital audit trail: For small business owners, platforms like Docusign Intelligent Agreement Management provide a time-stamped Certificate of Completion for every agreement, documenting exactly when you signed and submitted your documents. When generated by a compliant e-signature system, this certificate serves as legally defensible proof of execution.

Visit the Docusign eSignature portal to learn how these tools can help you manage high-stakes financial documents and signatures securely, with features designed for reliability and enterprise-grade protection.

Frequently asked questions

Some additional details people ask about filing for a tax extension.

Is there a penalty for filing an extension? 

No. Filing a federal tax extension using Form 4868 is free. Penalties only arise if you file your return late without an extension or fail to pay any taxes owed by the original April deadline. Keep in mind: an extension gives more time to file, but it does not extend the time to pay taxes – interest and failure-to-pay penalties may still accrue on any unpaid balance.

Can I file an IRS extension electronically? 

Yes. In fact, the IRS encourages it. You can e-file your extension request using tax software, through a tax professional, or by using the IRS Free File tool. Additionally, if you pay your estimated tax electronically and properly designate the payment as an extension (Form 4868), the IRS will automatically record your extension request – usually eliminating the need to submit a separate paper form.

What happens if I don’t file my extension by April? 

If you owe taxes and fail to file or extend your return, the IRS, may charge the failure-to-file penalty (generally 5% of unpaid taxes per month or part of a month), up to a maximum of 25%. This is usually much higher than the failure-to-pay penalty (0.5% per month). Filing a timely extension eliminates the risk of the expensive failure-to-file penalty for six months. Note that interest and failure-to-pay penalties can still accrue on any unpaid taxes.

Is filing an extension a red flag? 

No. Filing an extension is a normal, legitimate administrative process and does not increase your audit risk. In fact, it is often better to file a careful, accurate return in October than rush to meet the April deadline and risk errors or omissions.