Tax Filing Extensions: Everything You Need to Know

For years, a common myth has persisted: filing a tax extension increases your chances of being audited by the IRS. It’s a misconception that’s caused unnecessary anxiety for taxpayers, discouraging them from utilizing a perfectly valid tool that can simplify their tax filing process. 

Today, we’re here to debunk this myth and explore the ins and outs of tax filing extensions—so you can approach the upcoming tax season with confidence. As you’ll see, there’s actually nothing wrong with filing an extension: in fact, it’s often the best choice for many of the clients we work with.

Filing an Extension Does Not Increase Audit Risk

One of the biggest misconceptions about tax filing extensions is that they raise your chances of being audited by the IRS. This is simply not true. Filing an extension does not increase your audit risk in any way.

While the IRS doesn’t disclose exactly what triggers an audit, as experienced CPAs, we do see certain patterns. Audits are typically associated with discrepancies in reported income, unusually high deductions relative to income, or mismatched data between your return and third-party reports like W-2s or 1099s. 

If anything, filing an extension gives you additional time to ensure your return is accurate and complete—and accuracy is one of the best ways to avoid an audit.

What Is a Tax Filing Extension?

A tax filing extension allows individuals and businesses to extend the deadline for submitting their federal tax returns. For most taxpayers, this means pushing the April 15 deadline to October 15. 

Importantly, an extension does not delay your obligation to pay any taxes owed—it only delays the submission of the return itself. If you estimate that you owe taxes, you’ll need to make a payment by the original deadline to avoid penalties and interest. 

At Revonary, our approach for clients who pay quarterly estimated taxes is to bundle what we estimate the first quarter payment will be with the extension payment. This provides a cushion on the previous year's tax liability that can be carried over to the following year’s estimated taxes. However, there is a balance to maintain: you don’t want to significantly overpay, as this essentially provides the government with an interest-free loan. 

All told, the extension simply gives you more time to prepare your return, gather supporting documents, and work with your accountant to ensure everything is accurate.

Why File an Extension?

There are many considerations when deciding to file an extension, especially if you’re working with a new CPA. Establishing a relationship with a new tax professional often takes time, as they need to familiarize themselves with your financial situation and gather key documents. 

That’s particularly true if you’ve been referred to a new tax professional in tax filing season: a time when your new partner will be swamped with work. An extension gives them the breathing room needed to review your finances thoroughly and ensure your return is accurate and optimized for deductions. 

Beyond this, there are several other reasons to consider filing an extension:

1. Complex Financial Situations: If you have multiple sources of income, investments, or significant deductions, it can take time to gather all the necessary documentation. For instance, you may not receive a corrected version of your Form 1099 from a brokerage firm until mid to late March, which makes filing early risky if changes to your forms are needed. Individuals with many K-1s often file extensions, since it can take time to receive all of these documents.
   
   
2. Unforeseen Circumstances: Life happens. Unexpected events like illness, family emergencies, or delays in receiving tax forms can make it difficult to meet the filing deadline.
   
   
3. Avoiding Errors: Filing in a rush increases the likelihood of making mistakes. Taking extra time to ensure accuracy can help you avoid IRS scrutiny and the hassle of amending a return later. If you’re not 100% clear on what you owe, file an extension, pay a little more than your estimate, and take the time to get your return right: there’s no penalty. 
   
   
4. Delayed Pension Contributions: Filing an extension can also benefit business owners who want to delay contributions to a SEP IRA or a profit-sharing plan. By extending the filing deadline, business owners effectively gain additional time to make these contributions, allowing for better cash flow management and potentially larger contributions if profits increase closer to the extended deadline.

There are many good reasons to submit a tax filing extension beyond those described here. Whether you should file an extension depends on your unique circumstances, and we encourage you to keep an open mind and discuss whether you should file an extension with your tax professional. 

State Tax Filing Extensions and Special Circumstances

It’s important to note that state tax filing deadlines may not always align with federal deadlines. Many states offer their own extensions, but the rules and forms vary. Be sure to check with your state’s tax authority to understand their specific requirements for filing an extension.

Additionally, some taxpayers automatically qualify for extended deadlines under special circumstances. For example:

• Expats: U.S. citizens living abroad are generally granted an automatic two-month extension to file their federal returns, moving the deadline from April 15 to June 15. However, any taxes owed must still be paid by April 15 to avoid penalties and interest. You may file for a further extension to extend your filing deadline to October 15.
  
  
• Disaster-Affected Areas: In 2025, taxpayers in federally declared disaster areas may qualify for automatic extensions. For example, North Carolina residents affected by severe storms have until May 1, 2025, to file their returns and make payments. Similarly, Florida taxpayers recovering from hurricane damage also have a May 1, 2025, deadline. The IRS typically announces these extensions on a case-by-case basis, so it’s essential to monitor their updates if you live in an affected region.

Need to File a Tax Extension? Revonary Can Help

Filing a tax extension isn’t something to shy away from—in fact, it can be one of the best decisions you make during tax season. It’s a valuable tool to manage your time, reduce stress, and ensure your return is accurate. 

And remember: tax filing extensions do NOT increase your audit risk. As long as you pay any taxes owed by the original deadline and file your return by the extended deadline, you’re in good shape.

Still have questions about tax filing extensions or other tax-related concerns? Reach out to the team at Revonary. We’re here to help you navigate tax season with confidence and ease.

Revonary Accountants & Advisors, LLC 

3 International Drive

Suite 110

Rye Brook, NY 10573