If you received a tax extension in April, the due date is October 15 — just over two weeks away. Tom O’Saben, National Association of Tax Professionals director of tax content, joins Wealth! to break down how you can take action.

O’Saben notes that it is crucial to pay your taxes on time to avoid any penalties, which could be as much as 5% per month. In addition, failure to pay the penalty could end up being as much as 25% of the tax itself. He warns that the statute of limitations for the IRS to audit a return is unlimited for returns that aren't filed, compared to the normal three-year window.

If you don't have the ability to pay your taxes in full, O’Saben notes that you can work out a payment plan with the IRS. "The IRS doesn't want to pull up to your house in a black sedan and pull you away for not paying your taxes. They want to work with you," he explains. The IRS offers both short-term and long-term payment plans.

While these plans usually charge about 8% interest, O’Saben highlights that it is "a lot cheaper than trying to put your tax debt on a credit card or getting a personal loan in a quick turnaround here."

He adds that getting on a payment plan can help you plan for next year's taxes: "If we can kind of rectify the situation now and get that moving, then you might be better off in the future. So we can be a little bit reactive and proactive at the same time."

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Melanie Riehl