The most common penalties are filing late or paying taxes late.

Filing late: If you do not file your return by the due date (including extensions), you
may have to pay a failure-to-file penalty. The penalty is usually 5 percent for each month or part of a month that a return is late, but not more than 25 percent. The penalty is based on the tax not paid by the due date (without regard to extensions).

If you file your return more than 60 days after the due date, the minimum penalty is $100 or, if less, 100 percent of the tax on your return.

Paying tax late: You will have to pay a failure-to-pay penalty of ½ of 1 percent (0.5
percent) of your unpaid taxes for each month, or part of a month, after the due date that the tax is not paid. This penalty does not apply during the automatic six-month extension of time to file period if you paid at least 90 percent of your actual tax liability on or before the original due date of your return and pay the balance when you file the return.

The failure-to-pay penalty rate increases to a full 1 percent per month for any tax that remains unpaid the day after a demand for immediate payment is issued, or 10 days after notice of intent to levy certain assets is issued.

For taxpayers who filed on time, the failure-to-pay penalty rate is reduced to ¼ of 1 percent (0.25 percent) per month during any month in which the taxpayer has a valid installment  agreement in force.

If the clock runs out, you can get an automatic six month extension of time to file to  October 15. However, this extension of time to file does not give you more time to pay any  taxes due. You will owe interest on any amount not paid by the April deadline, plus a late  payment penalty if you have not paid at least 90 percent of your total tax by that date.  Taxpayers needing Form 4868 should act soon to be sure they have the item in time to  meet the April deadline.

Source: IRS Website

Are you struggling to get your taxes done by the deadline? You can electronically file a tax extension (Form 4868) and problem solved. Form 4868 is an application for automatic extension of time to file a U.S. Income Tax Return.

Filing a tax extension will extend your deadline to file a tax return to October 15, 2009. That gives you six more months to worry about filing. Basically, all you are doing is asking the IRS for more time to file your taxes. However, the IRS still wants their money if you owe. So to avoid any penalties and interest it is best to file form 4868 with the IRS before or on April 15.

Extend your IRS income tax deadline by using Form 4868, which extends the filing deadline to October 15 for forms 1040, 1040A, or 1040EZ. You can use form 4868 if you are an Individual, Sole Proprietorships (Schedule C) or a Single Member LLCs.

The IRS due date for a personal tax extension is April 15 and if you electronically file a tax extension the IRS will accept corrections through midnight EDT on April 20. If your extension is rejected for any reason, you can correct and resubmit for no extra charge using a company like FileLater.

eFile form 4868 and you will not only give yourself more time to file your income taxes but you will also avoid the late filing penalty. If you use an online company to file your tax extension you will receive the comfort in knowing your extension was receive by the IRS. Most online companies will let you know within a few hours if you were accepted or rejected. If you were rejected you will have time to correct any mistakes and re-file.

So try not to worry and efile form 4868 with the IRS and give yourself peace of mind that you have more time.

Form 4868 : Application for Automatic Extension of Time To File U.S. Income Tax Return

If you are not able to file your federal individual income tax return by the due date, you may  be able to get an automatic 6-month extension of time to file. To do so, you must e-file  Form 4868, Application for Automatic Extension of Time To File U.S. Income Tax Return by  the due date for filing your calendar year return (usually April 15) or fiscal year return.

Form 4868 is a tax extension for individuals. This includes all 1040 individuals, 1099 contractors, single member LLCs and Schedule C Sole Proprietors. File an individual tax extension and extend your tax deadline to October 15 for forms

• 1040
• 1040A
• 1040EZ
• 1040NR
• or 1040NR-EZ returns.

Form 4868 does not extend the time for payment of tax, however you will just need to  show an estimate when filing. You can pay none, all, or part of your estimated income tax  due by using your checking or savings account.

The IRS will accept corrections through midnight EDT on April 20.