Let's repeat that point. You have to pay all the 1997 taxes you owe even if you use the extension. So you must still do all the necessary work to calculate the amount of tax you owe. Even better, you've got to come within 90% of the final bill to avoid paying underpayment penalties. Note that you may have already done this through withholdings and estimated tax payments throughout the year.

Form 4868 - Application for Automatic Extension of Time to File U.S. Individual Income Tax Return asks for these numbers. Your 1997 tax liability goes on Line 4. And the amount you're paying with the extension goes on Line 10.

What If You Don't Got the Dough?

If you've done zero tax planning over the year, your final tax bill maybe a big shock. If you can't pay it all now, you can still file for the extension. Pay what you can, but know that will be charged interest and penalties on the unpaid amount.

Four Months Extra

The extension, which must be filed by midnight on April 15, 1998, buys you four months. That's through August 17, 1998. (The 15th is a Saturday that month, so the IRS allows you the weekend.) But try not to procrastinate twice. Interest and penalties are tallying as each day goes by. Besides, when it's time for sun and fun at the beach, you don't want to have a tax return to pump out.

What Are These Interest and Penalties?

In order to avoid paying penalties, you must pay in at least 90% of the final tax bill due, notes Jose Reynoso, principal consultant at Price Waterhouse. So try to calculate as close as you can.

You will owe interest on any part of your total tax bill not paid on April 15, says Randi Grant of Morrison, Brown, Argiz. The interest will start calculating on the 15th and will keep adding up until the day you file your return. "Even if you had a good reason for not paying on time, you will still owe interest," say the instructions to Form 4868.

The penalties are assessed as a type of "punishment" for paying your balance late. They also start tallying on April 15. Note that you may be able to avoid paying these penalties if can prove to the IRS that there was a good reason why you weren't able to pay the amount owed. Attach a written statement to your return when you file and fully explain your reasoning.

"Any explanation that documents how you are unable to complete your return will work," says Grant. The most obvious is that you are waiting for documents from a third party. But, if all necessary documentation was lost, say, in a fire, then that's likely to be an acceptable reason, too.

So Why Extend at All?

Bill Fleming, director of personal financial services at Price Waterhouse, says that those who typically file for extensions are waiting for income information from a pass-thru entities, like partnerships, LLCs and S-Corps. If you received an inheritance in 1997, notification from the estate could hold you up as well. Sometimes those numbers are readily available, but the folks in charge may not have prepared the corresponding forms. Call and ask for the most available numbers.

Finally, a Tax Perk for Being Married

Perhaps as compensation for the "marriage penalty," there's a marriage perk. If you file jointly, only one of you has to file for an extension. Hey, take what you can get.

Your Last and Final Hope

If, come August, there is still some reason why you can't file, you can try to get two more months out of the IRS. But this time you have to give a written reason -- and "too much sun" won't cut it. The IRS will then notify you as to whether your reason has been approved.

If it's not, you'll have to file and pay any balance due within 10 days of the notification. That will include any extra interest and penalties that have been calculated from August 17 on.