Although I have all my tax information now in one place, I would like to study itemized deductions better and make sure that I file all my taxes correctly and maximize my returns. Does it make sense to file form 4868 and seek extension to file taxes? Are there any downsides in filing taxes later with an extension?
An extension is an extension to file, not to pay. If you expect to pay, you'll owe penalties/interest for paying late.
However, an extension of time to file is not an extension of time to pay. That means, if you owe, you should pay the IRS by the April 18th deadline to avoid penalties and interest.
FYI you have until April 18th in 2011 because April 15th is a holiday which gives you an extra weekend to work on tax investigation.
@AlexB is correct. Unfortunately, I always end up filing with a 4868 because some of the corporate deadlines for filing that I need are after 4/15. And to be safe, I always OVERPAY my estimated taxes on 4/15 and then later either apply those overpayments to the next tax year or get a refund in October. When I say safe, I mean pay enough such that regardless of decisions you make about more or less aggressive deductions, you wouldn't pay penalities for underpayments. If you decide as I do, to be safe, then the disadvantage is that you are giving the goverment a loan for free, and of course, not having that excess payment to use yourself.