Form 4868 and Form 7004 extend the time to file a return. They do not extend the time to pay the tax. Every year people learn this from a bill in November, so here it is in April: your 2026 tax is due April 15, 2027, whether or not you extend.
What happens to unpaid tax after April 15
Interest starts at the IRS underpayment rate, 7 percent for the fourth quarter of 2026, compounded daily. The failure-to-pay penalty starts at 0.5 percent of the unpaid balance per month. Both run until you pay. Neither cares that you extended.
On $10,000 unpaid from April to October, that is roughly $350 in interest and $300 in penalty. Not a catastrophe. Not free.
What you avoid by extending
The failure-to-file penalty, which is ten times larger: 5 percent per month, up to 25 percent. On the same $10,000, filing nothing until October costs $2,500 in penalty on top of the interest and late payment penalty. The extension saves you that. It does not save you the rest.
What to do if you cannot pay in April
- Extend anyway. It protects you from the big penalty.
- Pay what you can with the extension. Every dollar paid in April stops accruing.
- File the return, then set up an installment agreement. The failure-to-pay rate drops to 0.25 percent per month while a plan is in place.
Common mistake
Paying nothing with the extension because you "will settle up in October." October is six months of interest and penalty later, and the IRS can decide an extension with an unreasonable estimate was no extension.
Ready to file it?
You can file a personal extension (Form 4868) or a business extension (Form 7004) online in a few minutes with TaxExtension.com, an IRS-authorized e-file provider operated by our publisher. The extension is automatic; the payment is still due on the original date.
Sources
- IRS, About Form 4868, "an extension of time to file is not an extension of time to pay"
- IRS, Failure to pay penalty
- IRS, Quarterly interest rates