Filing on Extension: What to Have Ready by October 15

If you filed Form 4868 this spring, your 2025 federal income tax return is due Thursday, October 15, 2026. This applies to individuals, including owners who report business income on Schedule C (the form for sole-proprietor business income). It also applies to calendar-year C corporations that filed Form 7004. Individuals do not get a second extension. The next two weeks are for gathering papers, checking what you paid, and filing. This guide lists what to collect, what late filing can cost, and how Alabama treats the extension.

What the extension did and did not do

Form 4868 gave most individuals six more months to file. It did not give more time to pay. Your payment deadline stayed at April 15, 2026. Interest has run on any unpaid balance since then. A late-payment penalty of 0.5% of the unpaid tax applies each month, up to 25%.

The late-filing penalty is much larger. It is 5% of the unpaid tax for each month or part of a month, also capped at 25%. In a month when both penalties apply, the filing penalty is reduced by the payment penalty, so the combined rate is 5% per month. A return filed more than 60 days late also has a minimum penalty. It is the lesser of $525 or 100% of the tax due.

If you are due a refund, there is generally no late-filing penalty. A refund claim still has a time limit of about three years, so do not let it slide.

Other entities follow other dates. Calendar-year partnerships and S corporations had an extended due date of September 15, 2026, which has passed. If you missed it, call us now. Calendar-year C corporations on a six-month extension share the October 15 date. The FBAR, a yearly report of foreign bank accounts (FinCEN Form 114), also has an automatic extension to October 15. Our Alabama business tax deadlines calendar lists the filing dates still to come.

Personal papers to gather this week

Start with income forms. Pull every W-2 (wages), every 1099 (other income such as interest, dividends and contract work) and every K-1 (your share of income from a partnership or S corporation). Check your brokerage and bank portals for corrected forms. Brokers often reissue them after the first release. Brokers were also expected to begin using Form 1099-DA for digital asset sales in 2025, and the return asks a digital asset question.

Next, collect the papers behind your deductions and credits:

• Mortgage interest statements (Form 1098) and property tax bills
• Charity receipts, with written acknowledgments for larger gifts
• Tuition statements (Form 1098-T) and student loan interest statements
• Health savings account forms (Form 1099-SA and Form 5498-SA)
• Form 1095-A if you bought marketplace health coverage
• Childcare provider names, addresses and taxpayer ID numbers
• Closing statements for any home you bought or sold

Then gather identity and bank details. You need Social Security numbers for everyone on the return, your bank routing and account numbers for direct deposit, and any IRS Identity Protection PIN. Keep a copy of your 2024 return nearby. It helps with carryovers and with signing electronically.

The 2025 return also reflects new deductions from recent tax law. These cover qualified tips, qualified overtime, interest on certain new car loans, and an added deduction for taxpayers age 65 or older. Payers may not have broken these amounts out on 2025 forms. Keep pay stubs, year-end statements and the lender's interest statement. Ask us which ones apply to you, and check IRS guidance for how each is reported.

Business records owners should have ready

Owner-managed businesses need a second pile. Your personal return often depends on it. A Schedule K-1 from your own partnership or S corporation must be final before your Form 1040 can be finished.

Have these ready:

• A year-end profit and loss report and balance sheet, tied to bank and card statements
• Payroll summaries, including Form 941 totals, Forms W-2 and W-3, and your contractor payment list
• A list of equipment and vehicles bought, with dates placed in service and costs
• A dated mileage log or vehicle expense records
• Home office measurements and related expenses
• Loan statements, plus owner contributions and draws
• Sales tax and other filings that tie to reported income

Two habits save time. First, reconcile before you send anything. Unreconciled books cause most of the back and forth in October. Second, label large purchases. A bare charge for a big amount forces a question we then have to ask you.

If your business return was extended to September 15, the K-1s should be in hand by now. If they are not, ask your preparer for the status today.

Check your payments before you file

Your return must show every payment you made toward 2025 tax. Build a short list:

• Withholding from every W-2, 1099 and retirement distribution
• The four federal estimated payments for tax year 2025, due April 15, 2025, June 16, 2025, September 15, 2025 and January 15, 2026
• Any payment made with Form 4868 or through IRS Direct Pay in April
• Any 2024 overpayment you chose to apply to 2025

Your IRS online account shows payments that posted. Compare it with your own records. A missing or misapplied payment is easier to fix before you file than after.

If you still owe tax, pay now. Interest and the 0.5% monthly penalty keep running until the balance is paid. You can pay before the return is done by using your best estimate. An overpayment comes back as a refund.

A worked example of the cost

The figures below are illustrative and rounded. They are not a prediction for your return.

Say a consultant expects to owe $10,000 for 2025. She pays $6,000 with her extension in April. She files on October 15 with $4,000 still unpaid.

The late-payment penalty has run for about six months at 0.5% a month. That is roughly 3%, or about $120, plus interest. She owes no late-filing penalty because she filed on time.

Now say she files one month late instead. The late-filing penalty adds about 4.5% of the unpaid tax for that month, or roughly $180. That is on top of the payment penalty and interest. Each further month adds more, up to the 25% cap.

The lesson is not that paying late is fine. It is that filing late costs far more than paying late. If you cannot pay in full, still file on time and pay what you can. The IRS offers payment plans, and some taxpayers qualify for penalty relief. Ask us whether either fits your case.

How Alabama treats the extension

Alabama follows the federal extension date. It grants an automatic extension until October 15 for Forms 40, 40A and 40NR. You do not need to file a separate extension form, paper or electronic. If you filed a federal Form 4868, you are still covered.

As at the federal level, an extension of time to file is not an extension of time to pay. If you owed Alabama tax, it was due by the original due date. You can pay with Form 40V or through My Alabama Taxes. Alabama penalty and interest rates differ from the federal ones, so confirm the current rates with the Alabama Department of Revenue before you estimate a balance.

Gather your federal papers and your Alabama papers together. The Alabama return starts from your federal numbers. Any federal change, such as a corrected K-1, usually changes the Alabama return too.

If you cannot finish by October 15

Sometimes a form is still missing. A K-1 may be late, or a brokerage statement may be corrected again. Do not let that stop you from filing.

File on time with your best information. Use the actual figures you have and reasonable, documented estimates for the rest. If the late form arrives later and changes the result, you can file an amended return on Form 1040-X. Amending is usually less costly than filing late, though your facts may differ.

Do not guess without a basis. A number with no support invites questions later. Keep a note of how each estimate was built.

Our view: the best use of these two weeks is to finish your records and check your payments before anything else.

If you owe and cannot pay it all, file anyway. Pay as much as you can now. Then ask about an installment agreement. For people on an active plan, the payment penalty rate can drop to 0.25% a month if the return was filed on time, but confirm the terms that apply to you.

When to talk to us

Talk to a CPA if any of these fit you:

• A K-1, 1099 or other form is missing, and October 15 is close
• You own a business and your books are not reconciled
• You owe more than you can pay
• You have foreign accounts, digital assets or a sale of property this year
• You missed the September 15 business deadline

This article is general information. It is not legal or tax advice for your facts. Contact Titus CPAs before the deadline and we will tell you what we need from you.