Tax Extension Deadline 2025: What Smart Taxpayers Do After Filing

Tax Extension Tips: Filing a Tax Extension Is Step One. Here’s What Smart Taxpayers Do Next.

If you filed a tax extension in 2025—whether for your business or as an individual—you’re not alone. The IRS receives millions of extension requests each year. Requesting a tax extension is typically done by submitting Form 4868 to the IRS.

But the final tax extension deadline is closer than it seems, and this additional time—these extra months granted by the extension—is your opportunity to reduce penalties, uncover deductions, and file with confidence. Keep in mind, this additional time is for filing your return, not for paying taxes owed. Requesting an extension can help you avoid penalty and fees for late filing, but interest may still apply to any unpaid taxes.

Why File a Tax Extension?

Common reasons taxpayers request an IRS extension include:

  • Waiting on K-1s, 1099s, or complex investment data
  • Incomplete bookkeeping or records
  • Significant life events: moving, starting a business, divorce
  • Managing payroll or accounting for a multi-state business
  • Missing documents or major life events that make it difficult to meet the original due date for tax filing

The tax deadline (the original due date) is typically April 15. The filing deadline for extensions is later, but any tax payments are still due by the original deadline.

A tax extension gives you time to file—but not time to pay. Interest applies to any unpaid tax after the original due date, so paying as much as possible by the deadline can help minimize penalties.

3 Things to Do After Filing Your Tax Extension

How to Check the Status of Your Tax Extension

After submitting your tax extension, it’s important to confirm that your extension request has been received and processed by the Internal Revenue Service. If you used DIY tax software log in to confirm receipt of your extension filing. For those who mailed their extension form, you can call the IRS directly to verify your extension status.

To make the process smoother, have the following details ready:

  • Your name and Social Security number or ITIN
  • The tax year and type of tax return (individual or business)
  • The date you filed your extension request
  • The method you used to file (e-file or mail)

Keeping a record of your extension request—including the date and method of submission—can help you quickly resolve any issues and ensure you have the extra time to file your tax return. Verifying your tax extension status helps you avoid possible penalties and gives you peace of mind as you prepare your return.

Don’t Forget Estimated Tax Payments

Filing a tax extension gives you more time to file your tax return, but it doesn’t delay your responsibility to pay taxes owed. If you’re self-employed or have income not subject to withholding, you must make estimated tax payments throughout the year to avoid penalties and interest on your federal tax liability.

Estimated tax payments are typically due on:

  • April 15 (first quarter)
  • June 15 (second quarter)
  • September 15 (third quarter)
  • January 15 of the following year (fourth quarter)

To determine how much tax you need to pay each quarter, use Form 1040-ES:

  1. Estimate your total tax liability for the year.
  2. Subtract your expected withholding and credits.
  3. Divide the remaining amount into quarterly payments.

You can pay your estimated taxes online, by phone, or by mail using the Electronic Federal Tax Payment System (EFTPS). Always keep detailed records of your payments, including dates and amounts, to ensure you’re meeting your tax obligations and to help avoid penalties and interest on unpaid taxes.

1. Work With a CPA Who Specializes in Tax Extensions

A CPA familiar with income tax extension and tax return extension processes can help ensure your extension is properly granted and that you meet all requirements. They can also help you find last-minute tax credits and avoid red flags. If your current CPA just ‘plugs in numbers,’ it might be time to switch.

Working with a tax professional can also help you uncover education credits, energy-efficient home deductions, and other benefits tied to the latest IRS updates. These opportunities are often overlooked when rushing to file after an extension.

2. Clean Up Bookkeeping or Payroll Records

Late or inconsistent records can lead to mistakes. Especially for business owners, now’s the time to catch up—before filing season hits full swing. Reviewing your records helps ensure all taxes have been paid and can help you identify any discrepancies before filing.

3. Reduce Tax Liability With Strategic Planning

Your CPA can help you reduce your tax bill by identifying additional deductions, such as student loan interest, as well as through retirement contributions, amended filings, or updated depreciation schedules.

Common Mistakes to Avoid After Filing a Tax Extension

  • Assuming no penalties apply
  • Waiting until the last minute to organize documents
  • Relying on outdated numbers from your bookkeeping system
  • Not getting a second opinion when unsure about your tax return
  • Failing to file a federal extension for your federal taxes, which can result in missed deadlines and additional penalties if you do not meet the requirements for a filing extension
  • Another common oversight? Failing to plan for state tax obligations. Many states have separate extension requirements and deadlines that differ from federal rules. If you do business in multiple states or moved recently, double-check each state’s rules—or consult a CPA who specializes in multi-state returns.

For example, many people mistakenly believe there is a cost to filing an extension, when in fact, obtaining a federal extension or a filing extension is often free.

Should You Switch CPAs After Filing an Extension?

Many taxpayers hesitate to switch CPAs during the tax season—but if you’re not confident in the guidance you’re getting, now is the perfect time to reassess. If you are requesting a review of your extension, or have questions about your state income tax deadline, a new CPA can help guide you through the process and ensure you meet all requirements.

At Cook CPA Group, we offer consultations for taxpayers who’ve extended. We’ll help you:

  • Evaluate risk of penalties or audits
  • Review past filings for missed opportunities
  • Get back on track with proactive guidance

Final IRS Tax Extension Deadline for 2025

Mark your calendar: The IRS final extension deadline for individual and most business returns is September/October 15, 2025. The standard IRS extension grants six months, but some taxpayers living in another country or serving in a combat zone may receive an automatic two month extension or two extra months to file. Don’t wait until August to get strategic.

Expert Support—Not Just Generic Resources

While online resources offer generic advice, real tax savings come from personalized strategy.

At Cook CPA Group, we work with individuals and business owners to:

  • Avoid unnecessary penalties
  • Maximize last-minute deductions
  • File accurately and confidently before the IRS deadline

Additional helpful topics include:

  • State income tax deadlines and how to file a state tax extension
  • Automatic extensions for military personnel and taxpayers living abroad
  • Tips to avoid penalties and interest on unpaid taxes

By using these resources and staying informed about tax law changes, you can maximize your deductions, minimize your tax liability, and ensure a smooth tax extension process. Stay organized, keep accurate records, and don’t hesitate to seek professional help if you have questions about your extension or tax return.

What Happens If You Miss the Final Deadline?

If you don’t file your return by October 15, 2025 (or your applicable extended deadline), the IRS can assess failure-to-file penalties of up to 25% of your unpaid taxes. This penalty stacks with interest and late payment fees. Even if you can’t pay the full amount owed, filing on time helps you avoid the largest penalties.

Ready to Get Help Before the Final Deadline?

We offer no-pressure reviews for extended returns. Whether you’re filing late or considering a new CPA, let’s talk strategy before the IRS closes the door.

 

Estimated Tax Payments for 2025

Federal Estimated Tax Payment Rules for 2025

If you expect to owe at least $1,000 in federal taxes after subtracting withholding and refundable credits, you’re generally required to make estimated tax payments for the current tax year. Here’s a breakdown of the rules for a very common question we receive:

It is important to ensure that your total tax payments, including withholding and estimated payments, meet certain requirements to avoid penalties for underpayment.

Who Needs to Pay Estimated Taxes?

  • Individuals, including sole proprietors, partners, and S-corporation shareholders, who don’t have enough tax withheld from wages, pensions, or other income.

  • High-Income Earners: If your adjusted gross income (AGI) was more than $150,000 ($75,000 if married filing separately) in the previous year, you must pay 110% of your prior year’s tax liability to avoid penalties.

Payment Schedule for 2025

Federal estimated tax payments are divided into four equal installments:

  1. 1st Payment: Due April 15, 2025.

  2. 2nd Payment: Due June 17, 2025.

  3. 3rd Payment: Due September 16, 2025.

  4. 4th Payment: Due January 15, 2026.

Payment Options

Online:

Use IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS) to make payments directly from your bank account.

By Mail:

Submit payment vouchers using Form 1040-ES.

Debit/Credit Cards:

Payments can be made via IRS-approved processors, but processing fees may apply.

Avoiding Penalties

Penalties may apply if:

You fail to pay enough estimated tax by the due dates.

You underpay based on the rules (90% of 2025 taxes or 100%/110% of 2024 taxes).

California Estimated Taxes

In California, if you expect to owe at least $500 ($250 if married/RDP filing separately) in state income tax for 2025 after accounting for withholding and refundable credits, you’re generally required to make estimated tax payments.

Payment Schedule for 2025:

California’s estimated tax payments are divided into four installments with the following due dates and corresponding payment percentages:

  1. 1st Payment: 30% of the estimated tax liability, due by April 15, 2025.

  2. 2nd Payment: 40% of the estimated tax liability, due by June 17, 2025.

  3. 3rd Payment: No payment due.

  4. 4th Payment: 30% of the estimated tax liability, due by January 15, 2026.

This uneven payment schedule is unique to California and differs from the federal estimated tax payment structure.

High-Income Taxpayers:

  • If your 2024 California adjusted gross income (AGI) exceeded $150,000 ($75,000 if married/RDP filing separately), you must base your estimated tax payments on the lesser of:

  • 90% of your 2025 tax liability, or

  • 110% of your 2024 tax liability.

  • For those with a 2025 California AGI of $1,000,000 or more ($500,000 if married/RDP filing separately), estimated tax payments must be based on 90% of the 2025 tax liability.

Payment Methods:

  • Online: Use Web Pay to make payments directly from your bank account.

  • By Mail: Use Form 540-ES, Estimated Tax for Individuals, ensuring you select the correct payment voucher for each due date.

     

 

FAQ: What Items Do I Need to Provide for Tax Preparation?

Providing all necessary documents upfront helps us complete your tax return accurately and efficiently. Here’s a detailed list of items to gather and submit:

1. Personal Information

  • For You and Your Dependents:

  • Social Security numbers or taxpayer identification numbers.

  • Birthdates for you, your spouse, and your dependents.

  • A copy of last year’s tax return (if you’re a new client).

  • Changes in Status:

  • Marriage, divorce, or legal separation documents.

  • Documentation of name changes (e.g., Social Security card update).

Early preparation for tax time is crucial to ensure a smooth and timely filing process.

2. Income Documents

  • Employment Income:

  • W-2 forms from all employers. W-2 forms are used to report federal income tax withheld.

  • Self-Employment or Business Income:

  • 1099-NEC or 1099-MISC forms.

  • Income and expense records for your business. Keep records of sales for tax purposes.

  • Investment and Retirement Income:

  • 1099-DIV for dividends and distributions.

  • 1099-INT for interest income.

  • 1099-B for sale of stocks, bonds, or mutual funds, including cost basis.

  • K-1 forms for partnerships, S-corporations, trusts, or estates.

  • 1099-R for distributions from IRAs, pensions, or annuities.

  • Cryptocurrency transactions and records.

  • Rental Income:

  • Income and expenses for rental properties.

  • Mortgage interest (Form 1098) and property tax records.

  • Other Income:

  • Unemployment income (1099-G).

  • Social Security benefits (SSA-1099).

  • Gambling winnings and losses (W-2G and receipts).

  • Alimony received (for agreements before 2019).

3. Deduction and Credit Documents

  • Health and Medical Expenses:

  • Health insurance forms (1095-A, 1095-B, or 1095-C).

  • Medical expenses, including doctor visits, prescriptions, and insurance premiums.

  • Long-term care insurance premiums.

  • Health Savings Accounts (HSA):

  • Form 5498-SA: Contributions made to your HSA.

  • Form 1099-SA: Distributions from your HSA (for medical expenses or other purposes).

  • Education Expenses:

  • Tuition statements (Form 1098-T).

  • Student loan interest statements (Form 1098-E).

  • Receipts for qualified education expenses (books, fees, etc.).

  • Home Ownership:

  • Mortgage interest statements (Form 1098).

  • Property tax bills.

  • Records for home improvements or energy-efficient upgrades.

  • Charitable Donations:

  • Receipts for cash or non-cash contributions.

  • Acknowledgment letters for donations over $250.

  • Childcare Expenses:

  • Amounts paid to care providers and their name, address, and tax identification numbers (TIN or SSN).

  • Retirement Contributions:

  • Records of IRA contributions (Form 5498).

  • Alimony paid (for agreements before 2019)

Taxation policies can significantly impact the deductions and credits you are eligible for, so it’s important to stay informed.

4. Special Situations

  • For New Homeowners:

  • Closing disclosure or settlement statement.

  • For Gig Workers:

  • Income from platforms like Uber, DoorDash, Etsy, or Airbnb.

  • Expenses for vehicle mileage, supplies, or home office use.

  • For Moving Expenses (Active Military Only):

  • Documentation of relocation expenses.

  • For Casualty or Theft Losses:

  • Insurance claims and appraisals.

5. Tax Payments and Refunds

  • Records of federal and state tax payments, including:

  • Estimated tax payments made during the year (date paid and amount).

  • Last year’s refund applied to this year’s taxes.

  • Balances due or paid on prior returns. Keep records of taxes paid at both federal and state levels.

6. Miscellaneous

  • Foreign Accounts:

  • Information for foreign accounts or assets (FBAR or FATCA reporting). Ensure proper access protocols for foreign accounts.

  • Identity Protection:

  • IRS Identity Protection PIN (if applicable). Unauthorized access to tax-related information can lead to severe consequences.

 

Frequently Asked Questions on Taxes for Business Owners for 2025

Tax Deadlines

  • When are the 2024 tax deadlines?

  • S-Corporations and Partnerships: March 17, 2025 (since March 15 is a Saturday)

  • C-Corporations: April 15, 2025

  • Estimated Tax Payments: April 15, June 17, September 16, 2025, and January 15, 2026

  • Extensions: File by the original deadline to get a six-month extension.

  • What happens if I miss a deadline?

  • Penalties and interest apply. For pass-through entities, missing the deadline can result in a late-filing penalty of $205 per partner/shareholder per month.

Depreciation and Asset Limits

  • What are the 2025 Section 179 depreciation limits?

  • The maximum deduction is $1.16 million, with a phase-out threshold beginning at $2.89 million of total equipment purchases.

  • What about Bonus Depreciation?

  • Bonus depreciation is set to phase down in 2025, allowing only 20% for qualified assets placed in service.

  • What qualifies for depreciation?

  • Most tangible personal property, including machinery, vehicles, office furniture, and computers. Some improvements to non-residential real property may qualify under Section 179.

Retirement Contributions

  • What are the 2025 contribution limits for retirement plans?

  • Contributing money to retirement plans like a 401(k) or IRA can significantly reduce your taxable income.

  • 401(k): $23,000, plus a $7,500 catch-up contribution if age 50 or older.

  • IRA: $7,000, plus a $1,000 catch-up for those 50+.

  • SEP-IRA: Up to 25% of compensation or $66,000, whichever is less.

  • SIMPLE IRA: $16,000, with a $3,500 catch-up for those 50+.

  • Defined Benefit Plans: Contribution limits vary based on the plan formula and actuarial calculations.

  • Can my business contribute to my retirement plan?

  • Yes, employer contributions are deductible for the business and vary by plan type. For SEP-IRAs and defined benefit plans, the business can make significant contributions.

  • What are the maximum contributions I can make with a 401(k), Profit Sharing, and Cash Balance Plan?

  • Combining these plans allows high-income business owners to maximize tax-advantaged retirement savings. Here are the limits for 2025:

  1. 401(k):

  • Employee Deferral: Up to $23,000, plus a $7,500 catch-up contribution if age 50 or older.

  • Employer Contribution (Profit Sharing): Up to 25% of eligible compensation, with total contributions capped at $66,000 (or $73,500 if including catch-up contributions for those 50+).

  1. Profit Sharing Plan:

  • Contributions made by the employer cannot exceed 25% of total eligible compensation for the business.

  1. Cash Balance Plan:

  • Contributions are based on age and income, allowing for much larger contributions compared to 401(k) plans.

  • For example, a 50-year-old business owner could contribute over $150,000, while someone in their 60s could contribute well over $200,000, depending on plan design and actuarial calculations.

  • Combined Contribution Limits:

  • The overall limit is determined by adding the maximum allowed contributions for each plan.

  • For 2025, high-income individuals could potentially defer over $300,000 in total contributions by leveraging a 401(k), Profit Sharing Plan, and a Cash Balance Plan together.

  • Who should consider this strategy?

  • High-income business owners looking to reduce taxable income while saving aggressively for retirement.

  • Businesses with stable cash flow, as cash balance plans require mandatory annual contributions.

  • What are the benefits of combining these plans?

  • Significant tax savings through deferred income.

  • Accelerated retirement savings, especially for business owners closer to retirement age.

  • What are the risks?

  • Cash Balance Plans require actuarial calculations and mandatory contributions, even in low-revenue years.

  • Proper planning is essential to ensure the business can sustain contributions.

Miscellaneous

  • What tax credits are available to small businesses in 2025?– The Work Opportunity Tax Credit (WOTC), R&D Tax Credit, and certain energy efficiency credits may still be available.

·         Standard mileage rates for 2025, effective January 1, 2025:

o    Business Use: 70 cents per mile, an increase of 3 cents from 2024.

o    Medical and Moving Purposes: 21 cents per mile, unchanged from 2024.

o    Charitable Organizations: 14 cents per mile, unchanged from 2024.

Pass-Through Entity (PTE) Tax Section for California – 2025

  • What is the California PTE tax election?

  • California’s PTE tax allows partnerships and S corporations to pay state income taxes at the entity level. This provides a workaround for the $10,000 federal SALT deduction cap, enabling owners to deduct state taxes on their federal returns.

  • How do I elect to pay the California PTE tax?

  • The election is made annually.  It’s important to note that if the first payment is not made by June 15, the PTE cannot make the election for that taxable year.

  • What are the payment deadlines for the California PTE tax?

  • First Payment: Due June 15, 2025. This payment must be the greater of:

  • $1,000, or

  • 50% of the total estimated PTE tax liability of the prior year.

  • Second Payment: Due with the entity’s tax return (March 17, 2025) to not incur penalties for late payment of PTE.

  • Who qualifies to make the California PTE tax election?

  • Partnerships and S corporations with qualified owners, which include individuals, trusts, estates, and certain disregarded entities owned by individuals.

  • C corporations and partnerships that are partners in the entity do not qualify.

  • How is the PTE tax calculated?

  • The tax is 9.3% of qualified net income, which is defined as the entity’s total income allocated to qualified owners for California tax purposes.

  • How does the PTE tax benefit owners?

  • Qualified owners receive a credit equal to their share of the PTE tax paid. This credit can be applied to their individual California tax liability, with any excess available for carryforward for up to five years.

  • Are there any changes for 2025?

  • California may adjust rules or rates for the PTE tax. Stay updated by consulting with us.

Business Taxes and Planning

Understanding Business Taxes

Navigating business taxes can be a complex and time-consuming task for any business owner. It’s crucial to understand the various types of business taxes you need to pay and how to file them correctly. The Internal Revenue Service (IRS) requires businesses to file different tax forms based on their structure. For instance, C corporations use Form 1120, partnerships file Form 1065, and sole proprietorships use Form 1040.

Business taxes encompass federal income tax, self-employment tax, employment taxes, excise tax, and more. The type of business tax you pay depends on your business structure. For example, C corporations are taxed on their profits, while sole proprietorships are taxed on the owner’s personal income.

To ensure compliance with tax laws and regulations, it’s essential to keep accurate records of your business income and expenses. This practice not only helps you maximize deductions but also minimizes your tax liability. Consulting with a tax professional or using tax preparation software can significantly aid in tax planning and filing, ensuring you meet all IRS requirements.

Tax Planning Strategies

Effective tax planning is a vital component of successful business operations. It involves analyzing your financial situation and developing strategies to minimize your tax liability. Here are some key tax planning strategies to consider:

  1. Maximize Deductions: Keep meticulous records of all business expenses and deductions to reduce your taxable income.

  2. Take Advantage of Tax Credits: Claim available tax credits for activities such as research and development, renewable energy investments, and hiring new employees.

  3. Utilize Retirement Plans: Contributing to retirement plans like a 401(k) or SEP-IRA can significantly reduce your taxable income.

  4. Plan for Tax Season: Stay organized throughout the year by maintaining accurate records and consulting with a tax professional to prepare for tax season.

By implementing these strategies, you can effectively manage your tax obligations and enhance your business’s financial health.

 

A Tax Strategy You May Be Missing

One of my joys in April (just before tax season is over) is getting the iPad all cleaned up and updating the app to watch the Masters. The beautiful course is a needed refresher that helps me to persevere the last few days until April 15. The scenery is stunning, the competition is rigorous and the unexpected seems to happen. The app has many ways to watch the competition such as focusing on specific holes like Amen corner or player groupings. As my mind drifts into a post tax season mode, I wonder what it would be like to watch in person one year.

Augusta tax rule
Amen Corner at Augusta Golf Club

There are houses on the course that one must be able to rent….

How much is it to rent?  Do they pay taxes on the rental income?  Surprisingly, the answer to the tax question is they probably don’t pay taxes: the tax code has something called the “Augusta Rule.”  This strategy was created to allow residents of Augusta, Georgia to rent their homes during the Masters’ golf tournament, without having to include this rental income on their tax returns.

The Augusta Rule 

The Augusta Rule has become a tax planning strategy that allows your business to pay rent to you for the purpose of holding business-related meetings in your primary residence or vacation home. For example, if you have a monthly meeting with the board of directors, your company can pay a reasonable amount to rent your home to conduct these meetings. Your company gets to take an expense deduction on the business tax return and you do not have to report the income on your personal tax return. This can be used for a maximum of 14 days each year. Keep in mind that if you go over the maximum of 14 days, you will have to report the entire rental income, and you will not receive any tax benefit since you will have to report the money as rental income on your personal return.

Tax Savings for Your Business 

According to the Augusta rule, you can rent out your home to your business (or for other purposes like Airbnb) for a total of up to 14 days each year. This home can be located anywhere in the United States, and the income from the rental will be excluded from your taxable income. For example, a rental expense of $35,000 (paid to you) generates your corporation $7,350 in tax savings while providing you $35,000 of tax free income.

Establish Rental Rate  

To establish a reasonable rental price you first need to document local pricing standards. You can do this by contacting at least three local establishments where businesses would normally have meetings, such as country clubs or hotels, to get an idea of venue costs in your area. 

You can use your home for a variety of business purposes, including planning sessions and even company parties. It’s recommended that you schedule your meetings in your calendar system and send out an agenda, if possible, since this provides additional documentation at tax time. 

There is no minimum participant requirement for these meetings, but keep in mind: 

  • The daily rental rate doesn’t include the cost of business meals. 
  • The home can’t be considered a full-time rental property. 
  • If you rent out your home for more than 14 days, you’ll have to report all of the income, and you won’t get the tax benefit.

Execute a Rental  Agreement 

To comply with the tax code, a written rental agreement is required between yourself and your company.  Additionally, thorough documentation supporting the rental price must be maintained as well as meeting documentation such as meeting minutes or notes.

Furthermore, to take advantage of the Augusta rule, the business entity structure must be an S corporation, C corporation, or partnership. It can’t be a Schedule C (self-employment income), unless the entity is a Single Member LLC. 

So, if you want to make your accountant and other employees happy, post tax season, consider scheduling a tax planning meeting at your house, on that course near the Masters…and we can help you be compliant with IRS regulations.

Augusta Rule
Augusta Golf Club at Sunset

References: Internal Revenue Code sections and related regulations include PLR 8104117; IRC Section 280A; IRC Section 274(a)(1)(B);IRC Section 267(a)(2); IRC Section 262; IRC Section 162; Gregory v Helvering, 293 U.S. 465 (1935); Frank Lyon Co. v United States, 435 U.S. 561, 573 (1978); Rev. Rul. 76-287; Leslie A. Roy v Commr., TC Memo 1998-125 PLR 8104117