5 Costly Mistakes Tax Extension Filers Make Before the October Deadline

Filing a tax extension can feel like a relief, giving you an extra six months to get your financial documents in order. However, that extra time can also create a false sense of security, leading to critical errors as the October 15th deadline looms.

Many taxpayers who file an extension end up making costly mistakes in the final rush. These errors can lead to missed savings, unexpected penalties, and unnecessary stress.

This guide details the five most common **mistakes tax extension filers make** and provides a clear action plan to help you avoid them, ensuring you file an accurate and optimized return.

Mistake #1: Ignoring the “Extension to File, Not to Pay” Rule

This is the single most common and costly misunderstanding. A tax extension gives you more time to submit your tax return, but it does **not** give you more time to pay the taxes you owe.

Your tax payment for the previous year was still due on the original April 15th deadline. If you didn’t pay in full by that date, the IRS has been charging interest and a Failure-to-Pay penalty on the unpaid balance.

The Failure-to-Pay penalty is typically 0.5% of your unpaid taxes for each month or part of a month that the taxes remain unpaid. While that’s much lower than the Failure-to-File penalty, it adds up. By avoiding this and other **mistakes tax extension filers make**, you can save a significant amount.

How to Avoid It: If you haven’t paid your estimated tax bill yet, pay as much as you can, as soon as you can. You can pay directly on the IRS website. Every dollar you pay now reduces the amount that is subject to further penalties and interest.

Mistake #2: Overlooking Valuable Tax Credits

In the scramble to meet the October deadline, it’s easy to focus only on gathering your income documents and forget to do a final check for major tax credits. This is one of the biggest **mistakes tax extension filers make**, leaving thousands of dollars unclaimed.

Many life events that lead to filing an extension—like having a child, adopting, or paying for college—also make you eligible for valuable credits.

• Dependent Care Credit: Did you pay for childcare last year so you could work? Don’t forget to claim these expenses. For a detailed guide, see our article on the Dependent Care Credit for extension filers.
• Adoption Tax Credit: If you finalized an adoption, you may be eligible for a substantial credit. You can estimate your savings with our Adoption Tax Credit Calculator.
• Education Credits: The American Opportunity Tax Credit and the Lifetime Learning Credit can help offset the cost of higher education for you or your dependents.

How to Avoid It: Before you file, use a comprehensive tool like our free Rebate and Credit Calculator to do a final review of your situation and identify any credits you may have missed.

Mistake #3: Missing Key Paperwork (Again)

Often, the original reason for the extension was a missing document, like a K-1 from a partnership or a corrected 1099. In October, filers are sometimes still missing this paperwork and are tempted to file without it.

One of the most critical pieces of information for parents is the **Taxpayer Identification Number (TIN)** of their childcare provider, which is required for the Dependent Care Credit. Not having this information is a frequent cause of filing errors.

How to Avoid It: Don’t wait until October 14th. Make a list of every document you still need and contact the necessary parties today. It’s better to file an accurate return with all your information, even if it takes some last-minute effort.

Mistake #4: Forgetting About State Taxes

A common misconception is that a federal tax extension automatically applies to your state tax return. This is often not the case and is one of the most surprising **mistakes tax extension filers make**.

Every state has its own set of rules. Some states accept the federal extension automatically, while others require you to file a separate state-specific extension form. Deadlines can also vary.

How to Avoid It: Visit your state’s official tax authority website (e.g., the California Franchise Tax Board, the New York State Department of Taxation and Finance). Confirm your state’s extension deadline and filing requirements. For a list of all state tax agencies, you can visit this helpful resource from the Federation of Tax Administrators.

Mistake #5: Thinking the Extension Gives You More Time to Contribute to an IRA

A tax extension gives you more time to *file your return*, but it does not give you more time to make contributions to most retirement accounts for the previous tax year.

The deadline to contribute to a traditional or Roth IRA for a given tax year is the **original April tax deadline**, even if you file an extension. Many filers mistakenly believe their extension to file also extends their time to save for retirement.

How to Avoid It: While the contribution deadline for last year has passed, use this as a learning moment. Plan your IRA contributions for the *current* tax year now, so you can make them before next April’s deadline and avoid making this mistake again.

Conclusion: File with Confidence

Filing an extension is a smart financial tool when you need more time to get things right. By being aware of these common **mistakes tax extension filers make**, you can use this extra time wisely.

Double-check your payments, do a final review for overlooked credits, confirm your state’s rules, and gather all your paperwork. This diligence will help you file an accurate return by October 15th and secure the best possible financial outcome.

Frequently Asked Questions