Tax season is in full swing! Will you be filing your taxes by the deadline, or do you need a little more time? The IRS reports that as of April 15th each year, about 50 million taxpayers still need to file their taxes (!!!)… so if this is you each year, keep reading.

Filing a tax extension request asks the IRS to give you some additional time to file your tax return. You don’t have to explain why you need the extension and the extension automatically moves the filing deadline for personal tax returns to October 15th.

While an extension gives you extra time to file your return, it does not give you extra time to pay your tax. Payments are still due by April 15th.

The Pros

You’ll Have an Extra 6 Months to Gather Your Information

Having extra time to finish your return is often necessary if you’re still waiting for tax documents from employers or if you need additional time to organize your deductions.

It Helps Reduce Late Penalties

The IRS imposes two types of penalties: First is a late filing penalty of 5% per month on any tax due. The second is a late payment penalty of a 0.5% per month.

If you file an extension and then file your return by the extended deadline, you’ll avoid the 5% per month late filing penalty. If you have tax due and do not make a payment until you file, you will just owe the 0.5% monthly late payment penalty.

However, if you are due a refund, there are NO penalties. Yay!

It Gives the Self-Employed More Time to Make Retirement Contributions

If you’re self-employed you may want to make contributions to your SEP IRA or SIMPLE IRA to reduce your tax liability. Filing an extension provides these taxpayers with an additional six months to do so.

The Cons

You Still Have To Pay By April 15th

As I already mentioned above, an extension will give you extra time to file your return, but any tax you owe is still due by the original deadline. While an extension will reduce your 5% monthly late filing penalty, any outstanding tax balance will still be charged a late payment penalty of 0.5% per month.

There’s No Extra Time to Make Traditional IRA Contributions

Contributions to a traditional IRA and Roth IRAs are still due by the original April deadline.

How Do You File for an Extension?

Luckily this one is easy (and free!). You’ll need to fill out Form 4868, then mail it or file it online using IRS e-file. To get an extension without the form, you can pay all (or part) of your estimated income taxes online. You’ll get an automatic extension just by paying, but you do have to fill out your return eventually.