Too Busy to File by April 15? Here’s My Simple Tax Hack for Physicians
And Stay Penalty-Free!
As physicians, we've got full plates — patients to see, charts to finish — and taxes? They're often the last thing on our minds.
Who has time to gather documents and file taxes by April 15? Forget it — there’s barely time to go to the bathroom.
So, are you thinking about filing an extension using Form 4868 to push the filing deadline to October 15?
You're on the right track!
But here’s the key: while you can extend the time to file, you cannot extend the time to pay your tax bill.
That means you will generally need to estimate how much you owe and pay it by April 15, even if you’re not ready to file the return until October.
This Is Where Things Get Tricky
When your income fluctuates — moonlighting, bonuses, and side gigs — it can be hard to estimate what you owe.
If you overpay, you are giving the IRS an interest-free loan => not good!
If you underpay, you will be hit with interest and potentially penalties => no bueno!
So here is a strategy I use to simplify tax season. It is not a one-size-fits-all solution — but it works for me, and you are welcome to adapt or tweak it for your situation.
My Strategy in a Nutshell
Step 1: File an extension by April 15
Step 2: Pay in at least 90% of what I think I’ll owe by April 15
Step 3: Pay the rest by October 15 when I file the return.
If I follow these steps, I avoid both failure-to-pay and failure-to-file penalties!
Yes, I’ll likely owe a bit of interest on the balance when I pay the rest — but I’d rather do that than risk steep penalties or overpay early and hand the IRS an interest-free loan.
Here’s why this approach makes sense to me:
Why I Almost Always File an Extension
Filing an extension is a no-brainer for me.
The failure-to-file penalty is brutal — 5% per month on the unpaid tax, upto a maximum of 25%. And being even one day late triggers a full month’s penalty.
What-Not-To-Do example:
I’ve already paid $90,000 through W-2 withholding
I owe an additional $10,000.
I accidentally file one day late, on April 16th, without an extension.
I get hit with a $500 penalty (5% of $10,000), just like that - for being one day late.
And to make it worse — that penalty is not tax-deductible.
By filing an extension, I get until October 15 to file my return — and as a bonus, it may even slightly reduce my audit risk, since the IRS has fewer resources later in the year to review returns. Win-win.
Why I Pay 90% by April 15
Even with an extension, any tax I owe is still due by April 15. If I have not paid enough, the unpaid balance is subject to the failure-to-pay penalty.
The failure-to-pay penalty is smaller than the failure-to-file penalty — just 0.5% per month, upto a maximum of 25%.
Here’s the good news:
There is a built-in safety valve to help avoid this penalty.
If I have paid at least 90% of my total tax bill by April 15, I can avoid this failure-to-pay-penalty entirely - thanks to a “reasonable cause” exception under Treasury Regulation § 301.6651-1(c)(3)(i).
In short: 90% is the magic number
Pay at least 90% by April 15 = no failure-to-pay penalty
File the return by October 15 = no failure-to-file penalty
Boom. No penalties.
However, there’s a catch…
The Catch: I Still Owe Interest
Even if I avoid the penalties, the IRS still charges interest on any unpaid balance between April 15 and the date I pay.
As of now, the interest rate is the federal short-term rate (around 4% for early 2025) plus 3%, making it roughly 7% annually for individuals.
Example:
I owe $10,000 when I file on October 15.
Interest: 6 months × 7% annual rate on $10,000 = roughly $350
That’s not ideal, but I would rather pay $350 in interest than give the IRS an interest-free loan by unintentionally overpaying my tax bill. Plus, I get to keep my cash liquid in the meantime - possibly even earning interest elsewhere.
(And yes, IRS interest is not deductible for individuals. It may be deductible for corporations, but not for you and me.)
What If I Already Paid in full?
Let’s say I had enough withheld from my paycheck or made estimated payments throughout the year to cover my entire tax liability by April 15th. In that case, as long as I file an extension by April 15 and submit my tax return by October 15, I won’t owe any penalties or interest.
I'm in the clear — no penalties, no interest. Simple.
Final Thoughts
If you are unsure how much you will owe but confident that you have already paid in at least 90% by April 15, filing an extension and wrapping things up by October 15 can help you avoid both the failure-to-file and failure-to-pay penalties — although you may still owe a small interest charge.
This strategy has saved me time, and stress — and it might work for you, too.
Disclaimer: click here