Wrong – the Form 4868 Individual Extension is only an extension of time to file your returns….not to pay the tax owed. If you filed an extension showing no tax due or an amount less than your true tax liability, you will be charged late payment penalties when you file your returns. The IRS requires taxpayers to estimate the tax that they will owe for the year and to pay that amount with the 4868 filing. Filing the Form 4868 helps to avoid a 5% per month late filing levy assessed by the IRS on returns not filed by April 15th. However, it doesn’t give you exta time to pay the tax.
If you filed an extension but know that you are going to owe tax with your return filing, don’t delay preparing your returns. The sooner you file the return and pay the taxes owed, the less penalty you will pay.
For 2012 returns, the IRS is waiving the failure-to-pay penalties in some instances because tax forms were delayed for some tax filers in the 2012 filing season. If your returns contain one of the affected forms and you made a good faith effort to figure your tax bill and paid it in with your extension, the IRS will waive the penalties as long as you pay your bill in full by October 15, 2013.