Extensions Aren’t “Free Time”—Here’s What Still Comes Due
Tax extensions are one of the most misunderstood aspects of tax filing—whether you’re self-employed, running a small business, or managing side income. Many taxpayers assume that an extension gives them extra time to pay their taxes. This is a common misconception; we will explain what an extension means and what you still need to pay on time.
What Is an Extension? And Why Does It Matter?
An extension gives you more time to file your tax return—but it does not give you more time to pay the tax you owe.
How we request an extension:
📄 Individuals: We file Form 4868
📄 Businesses: We file Form 7004
The critical point: Even with an extension, your tax payment is still due by the original deadline. Missing this can trigger penalties and interest.
Not sure what you owe or if you need an extension? Become a Carolina Forest CPA Group customer and we will determine your tax situation and calculate estimated payments.
⚠️ What’s Still Due Even After Filing for an Extension?
Here’s what you must still pay or file by the original deadlines:
💰 Tax Payments & Deposits:
✓ Estimated tax payments are still due on their quarterly schedule
✓ Any unpaid tax begins accruing interest from the day after the original due date
🏢 Business Tax Payments:
✓ C corporations still need to pay tax by the original due date
✓ Pass-through entities (partnerships and S corporations) generally don’t pay entity-level tax, but individual owners must still make estimated tax payments on their share of income
📊 The Bottom Line: Extension = More Time to File, Not to Pay
Think of an extension as buying time to prepare accurate paperwork—not as postponing your tax bill. The IRS expects payment by the original deadline regardless of whether you’ve filed for an extension.
Key consequences of missing payment deadlines:
Interest accrues immediately from the original due date.
Failure-to-pay penalties can apply (0.5% per month on unpaid balance).
Maximum: The penalty can grow up to 25% of the unpaid tax.
If you’ve filed your return and entered into an approved payment plan, the monthly penalty rate is reduced to 0.25%.
After you receive an IRS notice demanding payment, if you still don’t pay within 10 days the rate may jump to 1% per month.
These charges continue even if you have a valid extension to file.
If you need an extension:
1️⃣ We calculate what you owe using last year’s return or current year estimates
2️⃣ Pay as much as possible by the original deadline to minimize interest and penalties
3️⃣ We file your extension (Form 4868 for individuals, Form 7004 for businesses)