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If I filed an extension for filing a federal income tax or gift tax return before 15th of April deadline but then still failed to file the return before the extended deadline of 15th of October, then will I retroactively incur the late filing penalty of 5 percent for every month starting from the original April 15th deadline (i.e. I'd basically be hit with whole 25 percent right away after I missed the October 15th deadline) or will only the months starting from October 15th count? I owed tax and didn't pay either. So there definitely will be late filing penalty but I'm just curious how it'll be calculated in this case

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  • When you filed for the extension in April did you make sue to overestimate how much you owed? Or do you owe more money now?
    – mhoran_psprep
    Commented Nov 6 at 16:20
  • @mhoran_psprep Forgot to mention and added to the post. I owe tax and didn't pay anything either. I just filed the extension without filling out the part about how much I owe
    – Vitalii Nechaev
    Commented Nov 6 at 16:25
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    The extension is for filing the return; it does not extend the deadline for payment.
    – Pete Becker
    Commented Nov 7 at 12:45
  • Since form 709 generally doesn't cause taxes to be due, there's generally no penalty for filing it late.
    – stannius
    Commented Nov 10 at 15:27

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You're supposed to make an estimated payment (if you think you owe) when you file the extension. Failure To File penalties are calculated from how late you file and the amount unpaid regardless of the extension. Your penalty is calculated from April 15.

So you'll owe 5% of the unpaid taxes for each month since April 15 (capped at 25% of unpaid taxes).

Interest is also due on penalties and accrues until you pay in full. So the sooner you pay (even if you capped the 25% penalty), the lower the accrued interest.

Here's a link to the relevant IRS information.

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    That link doesn't answer the question. It says, "The Failure to File penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late." but it doesn't say when the return is considered late. I would think it would be late on October 16, since an extension was filed.
    – prl
    Commented Nov 7 at 13:07
  • The page says that the Failure to File penalty is computed using the amount of tax that was unpaid on the unextended due date, but it doesn't say that lateness is calculated using the unextended due date. I agree with prl.
    – user2357112
    Commented Nov 7 at 15:16
  • I speak from experience. The penalty commences from when the tax was due. Filing an extension does not abate the start date of penalties because taxpayers are obligated to pay their taxes by April 15. That's why we need to send a payment along with an extension request if money is owed. If you are due a refund then, you get money back. If you still owe money on October 15, then penalties have already accrued. TLDR; the money is always due by April 15. The extension is just for filing the return at a later date.
    – Rocky
    Commented Nov 7 at 20:02

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