April is officially tax month! Have you sent in your federal tax return? If not, you’ve got until Tuesday, April 18th to get it to the IRS. If that’s not enough time, don’t panic. Fortunately, filing a tax extension is an available option. But is an extension right for you? Let’s take a look at the pros and cons of when and why to file a tax extension.
Pro: How easy is it to file a tax extension? Securing a tax extension is simple. Starting April 1, Shoebox will file an extension for you and will prepare your return once we receive all of your tax documents. From there, we will estimate any taxes you may owe to prevent unnecessary IRS penalties.
Pro: Is filing a tax extension a red flag? Many people believe that there’s a direct relationship between tax extensions and tax auditing, or that a tax extension raises a red flag to the IRS. Luckily, that is incorrect. In fact, getting a tax extension can actually reduce your chances of facing an IRS audit.
Pro: How do I avoid tax penalty when filing an extension? An extension of time to file your return does not grant you any extension of time to pay your taxes. You should estimate and pay any owed taxes by the regular deadline to help avoid possible penalties. If you file an extension and submit your return by October 16th, you’ll avoid the late filing penalty.
Con: What happens if you miss the tax extension deadline? If you miss the tax extension deadline, you’ll incur penalties that are retroactive to your original tax due date. Remember, you must pay your taxes by the tax deadline or you’ll incur penalties. The tax extension deadline only applies to filing taxes, not paying the tax that is due.
Con: Is filing an extension worth it? Filing an extension is a positive thing if you truly need the additional time to gather tax forms, bank information or receipts. However, if you file an extension, then wait several months to begin collecting the necessary documents, you’ll still feel pressed for time come October!
We Can Help!
The bottom line is that filing a tax extension is fairly simple and straight-forward. Yet, if you continue to wait, the tax filing process does not magically become any easier.
Need help? We’ve got you covered! Working with a qualified tax professional helps to maximize your benefits with strategic planning and expertise. Reach out to Shoebox Tax Prep for a complimentary tax consultation today!