There are many reasons to file an income tax extension. Whether you are missing key information or are away from home during tax season, you have the right to request extra time to complete and submit your return.
However, there are several misconceptions about tax extensions that create hesitation for people looking to file. Below are six common misperceptions and an explanation that sets the record straight for each.
- “Filing an extension also gives me an extension to pay.” Not true. An extension will give you additional time to get your paperwork to the IRS, but it does NOT extend the time you have to pay the taxes you owe. You must estimate any amounts due and pay it with the extension or be subject to penalties and interest.
- “Filing an extension will make me more likely to be audited.” Not true. In fact, there is some evidence to suggest that those who file extensions are less likely to be audited. Some tax professionals speculate that auditors have quotas they must meet, and they tend to have done so before the October tax extension deadline.
- “The IRS doesn’t like granting extensions and will likely reject my request if I don’t have a good reason for missing the April deadline.” The IRS doesn’t ask why you need an extension, and automatically grants a grace period of six months to anyone who fills out the form correctly.
- “I’m embarrassed because nobody else has to ask for an extension.” Actually, more than 10 million people file for a tax extension every year. Some taxpayers do so as a regular practice to give themselves more time to produce a complete and accurate return.
- “Requesting a tax extension requires the assistance of an accountant.” Not true. Filing for a tax extension is easy and can be done online. What’s known as the FileLater system lets you e-file the request in just minutes.
- “If I’m granted an extension, I can’t submit my return until October.” While October is the deadline for filing, you can submit your return at any point prior to then.
The Key is Ensuring Your Return is Done Right
A tax extension is a useful tactic that you are fully entitled to take advantage of as needed. If for any reason you aren’t prepared to submit a complete and accurate return by your filing deadline, you should request an extension and then talk with a tax accountant in Fort Collins like Wych Tax to ensure that the return is completed correctly. Contact us at your convenience to learn more about our tax and business accounting services.
