The deadline for filing your 2018 taxes is April 15, 2019, but there's no reason to panic if you aren't ready to file yours by then. It's pretty easy to get a tax extension when you need one. This gives you an additional six months to file your tax return, but that doesn't mean you have six extra months to pay. Below, I explain what a tax extension is and is not, when you may want to consider it, and how you request one.

How does a tax extension work?

If you aren't prepared to file your tax return by April 15, you can request an extension by filling out Form 4868 and submitting it to the IRS by the tax deadline. This gives you until Oct. 15, 2019 to file your return. If you'd like an extension for your state return as well, you may need to fill out a separate form. Check with your state tax authority to figure out how to file a state tax extension.

A tax extension gives you more time to file your return, but it doesn't give you more time to pay if you owe taxes. You must pay any outstanding tax bill by April 15, or the government will charge you a monthly penalty until you pay off the balance. Filing a tax extension won't eliminate the penalty, but it can reduce it.

The government charges 5% of the total amount owed per month, with a maximum penalty of 25%, if you fail to file your tax return. There's a 0.5% monthly penalty for failing to pay your taxes, with a maximum penalty of 25%, but if you also fail to file, your fail-to-file penalty will drop to 4.5% per month so that your balance does not accrue more than 5% interest per month. You'll still pay the 0.5% failure-to-pay penalty if you file a tax extension, but you won't have to worry about the 5% failure-to-file penalty, unless you fail to file a return by the Oct. 15 extension deadline.

If you're not sure how much you actually owe in taxes, you can estimate based off your own records and the tax forms you received from your employer. Self-employed people can fill out Form 1040-ES to determine how much they should pay in. Aim to pay at least 90% of your estimated taxes by April 15 to avoid penalties.

When to consider a tax extension (and when not to)

Sometimes circumstances may prohibit you from filing your tax return by the April 15 deadline. Perhaps you lost or never received tax documents from your employer, or maybe a family emergency or natural disaster made it difficult to find time to file your taxes. You don't need to explain your reasons to the government in order to have your extension request approved. U.S. citizens who live outside of the U.S., as well as those on active-duty military service outside the U.S. are automatically granted a tax extension without filing Form 4868, though this only lasts until June 15, or the following business day if June 15 falls on a weekend or holiday.

Tax A woman picks up tax forms in the lobby of the Farley Post Office in New York City, April 15, 2008. Photo: Chris Hondros/Getty Images

If you're self-employed and you need to organize your paperwork or double check the costs of your deductions, a tax extension could also make sense for you. The extra time enables you to verify the accuracy of your return and make sure there are no errors; careful filing reduces your risk of an audit.

If you're trying to procrastinate your taxes because you can't afford to pay what you owe, a tax extension is not your friend. You'll still incur the 0.5% monthly failure-to-pay penalty, and this could make your balance more difficult to pay off. Instead, pay as much as you can by April 15 to minimize the amount you'll pay a penalty on. Then, consider signing up for a payment plan with the IRS. You may have to pay a set-up fee and your balance will still accrue interest, but the interest rate will be 0.25% per month instead of the 0.5% monthly interest rate for those not on the payment plan.

The government may accept an offer-in-compromise instead, but only if you've filed all of your tax returns, made your estimated tax payments, and you are not in bankruptcy. This means that you make an offer of what you can pay, either as a lump sum or a monthly payment, and if the government accepts, you'll be off the hook for any remaining taxes you owe.

Tax extensions can give you some more breathing room if you don't have your return ready by April 15, but it's important to understand the cost of doing this, especially if you owe taxes. The interest your balance will accrue could make it more difficult to pay off, leaving you worse off after the extension than you were before. Consider all of your options before filing a tax extension to be sure it's the right choice.

This article originally appeared in the Motley Fool.

The Motley Fool has a disclosure policy.