{"version":1,"type":"rich","provider_name":"Libsyn","provider_url":"https:\/\/www.libsyn.com","height":90,"width":600,"title":"Tax Extension Mistakes to Avoid This Filing Season, #297","description":"In the last episode, I discussed seven mistakes to avoid when filing your 2025 taxes. So in this episode, I'm going to discuss the tax-filing mistakes people can make when filing an extension. Here are the four most common extension errors that could cost you money, including misconceptions about payment deadlines, underestimating taxes, and the importance of understanding state-specific extension rules.  You will want to hear this episode if you are interested in... [00:00] Mistakes that people can make if they're filing an extension [01:41] Importance of filing for an extension by the tax deadline [02:35] Distinction between failure-to-file and failure-to-pay penalties [03:53] Suggestions for estimating: using last year's tax return, factoring in income changes, or major events [06:09] Importance of reviewing and complying with state-specific deadlines and requirements [08:21] Filing an extension buys time for accuracy but doesn't delay payment obligations   Avoiding Common Tax Extension Mistakes Tax season is a stressful time for many, and for those with complex finances, business obligations, or unexpected circumstances, filing a tax extension may seem like a wise solution. These are the four biggest mistakes people make when filing a tax extension, along with my practical tips to avoid penalties and unnecessary stress.    Notifying the IRS The first\u2014and perhaps most critical\u2014mistake is assuming that wanting more time is enough. Extensions aren\u2019t automatic; they require formally notifying the IRS by filing Form 4868 by the standard tax deadline, usually April 15th. Without this key step, the IRS will consider your return late, resulting in penalties. If nothing else, mark this on your tax checklist: file Form 4868 on time, every time.   Extension to File Isn\u2019t Extension to Pay A widespread misconception is that an extension grants extra time to pay taxes due. Only your paperwork deadline shifts, your payment due date does not. Any unpaid federal taxes accrue interest from the original deadline, and failure-to-pay penalties start after April 15th. In fact, failing to file entirely triggers even steeper penalties. Estimate your tax liability and pay what you owe, even if you\u2019re still finalizing the details. Overestimating is safer, as any excess will be refunded after you fill it in.   The Hidden Danger of Inaccurate Estimates Filing an extension isn\u2019t a hall pass to put off financial reckoning. You\u2019re still required to estimate how much you owe\u2014a process that can trip up those who experienced income changes, investment gains, asset sales, or one-time distributions. The IRS expects most to pay either 90% of their current-year tax liability or 100% of last year\u2019s taxes (110% for high earners with AGI over $150,000) by the deadline to avoid penalties. Miss these benchmarks, and you could face interest or underpayment penalties\u2014even if you settle up once you eventually file. Review your prior year\u2019s return and factor in any unusual income for the year. If in doubt, partner with a tax professional or use IRS Form 1040-ES for guidance.   Don\u2019t Overlook State Tax Extension Rules One major mistake is forgetting\u2014or not knowing\u2014that state tax extension rules often differ from the IRS. Some states, like Connecticut, sync with federal extensions only if you owe nothing additional; if you do, you\u2019ll need to file a state-specific extension. New York requires its own extension form, and most states expect payment by their deadline, regardless of a federal extension. Double-check your state tax agency\u2019s website or contact a professional. Often, a separate state extension is mandatory, and missing this step can come with its own set of penalties.   Plan for a Stress-Free Tax Extension Filing a tax extension can buy valuable time, but it\u2019s not a financial \u201cpause\u201d button. Always file Form 4868 (and any state-specific forms) on time. Pay the lesser of 90% of current-year or 100% (or 110% for high earners) of last year\u2019s tax by the April deadline, and study your state\u2019s requirements\u2014federal rules don\u2019t always apply. Being proactive can save you hundreds (or thousands) in penalties and give you the space to file correctly and confidently later in the year.   Resources Mentioned IRS Form 1040-ES IRS Form 4868 Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE    Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com\/contact Subscribe to Retire With Ryan   ","author_name":"Retire With Ryan","author_url":"http:\/\/retirewithryan.libsyn.com\/website","html":"