MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

How to Avoid the IRS Penalty When You File a Tax Extension

8 Apr 2026 · 1 min

Watch on YouTube

0:38

In this concise instructional segment, Mark Kohler explains a practical method to sidestep the IRS underpayment penalty when filing a tax extension. He advises viewers to estimate their total tax liability for the year, then deliberately overpay the estimated amount by a modest margin (e.g., $100 extra) when submitting the extension payment. This overpayment ensures the IRS does not assess a penalty for underpayment. When the taxpayer later files the full return (typically in July), the excess payment is applied toward the tax bill, and any overpaid amount is refunded, effectively eliminating the penalty while keeping the taxpayer’s cash flow predictable.

Chapters

How do I avoid the penalty altogether, even though we know it's not the end of the world? You want to estimate what you think you're going to owe. If you do the math and you're like, oh, I made this much in my small business, I had this much withheld at work, I think I'm going to owe the IRS around $1,000. Okay, send them $1,100 just to be safe. Okay, file your extension, send in $1,100, and then when you go file in July, you'll get a refund of that $100. Remember, you still owed $1,000, but you estimated a little high to be safe. You sent them $1,100, and so in July when you file, the $1,000 will come off of your deposit and you get a $100 refund. Boom, bada-bang, no penalty.