Filing an “Application for Automatic Extension of Time To File U.S. Individual Income Tax Return” is not bad, does not increase your taxes and allows you an additional six months to accurately prepare and file your tax returns. The key word in this is “File”. The form and related extension process allows an extension of time to FILE your returns, not an extension of time to pay your tax bill.
There is no extension of time to pay income taxes. If you utilize the practice of extending your return in order to “buy time”, you will experience an unpleasant surprise. You might say that you really are buying the time. This is because after you do file your returns and pay your taxes due, you will receive a balance due notice within a couple months. This notice will acknowledge that you have paid your taxes but will assess you for interest and penalties from April 15th until the date that you finally paid your tax bill.
If you are not going to pay your taxes until later than April 15th, it is still of value to file for an extension if you are also not going to file your returns by April 15th. This will keep the balance due notice from including a late filing penalty. This is not to be confused with the late payment penalty. They are two different penalties.
Proceed with eyes open and fully informed.
File an extension if you need it, but be sure to pay the amount you estimate owing with that extension. Failure to pay your taxes, in full, even with a properly filed extension, leads to underpayment penalties, late payment penalties and interest on the outstanding balance from April 15th until the date you make your payment.