Did life get the better of you this year, and despite your best efforts, it just doesn’t look like you’ll be able to file your tax returns by the deadline?
If so, filing an extension could be a great option for you. If you’ve never filed an extension before, you probably have questions about what that means, how it works, etc.
So here’s a Q&A I put together to get you up to speed:
What is an extension?
An extension gives you extra time to file your tax returns and still have them be considered “on-time.” For individual tax returns, an extension gets you an extra six months to file before you’d get hit with the penalties for failure-to-file.
Why would I file an extension?
You might file an extension for a variety of reasons, but basically you file an extension when your tax returns won’t be ready to file by the initial deadline, and you don’t want to pay the penalties for filing late.
Why wouldn’t I file an extension?
If you’re expecting a big refund (especially if you’re eligible for certain refundable tax credits), you might want to file your returns as early as possible to get your money back faster.
What do I have to do to qualify for an extension?
You just have to file the appropriate paperwork with the IRS before the initial deadline (basically, you’re just saying “pretty please”).
There are separate forms to file for business tax returns and tax returns for individuals.
Do I have to have a good excuse for the IRS to give me an extension?
Nope! Being granted an extension is about as close to automatic as it gets. If you put the right information on the right extension form and file your extension with the IRS on time, you should be all set!
Is filing an extension only for irresponsible slackers?
Not at all! Extensions are commonly filed by small business owners who need more time to finish up their bookkeeping, investors in partnerships or S Corporations (especially if the business returns get extended), and even CPAs that prepare tax returns for a living (I filed an extension for my returns weeks ago)!
There’s nothing wrong with filing for an extension, and it definitely doesn’t make you a bad person.
Am I more likely to be audited if I file an extension?
No. The IRS says that the act of filing an extension does not make your returns more likely to be audited.
If I file an extension, do I get extra time to pay my taxes?
No. Your taxes are still due by the original deadline, so you should send in estimated tax payments when you file your extension if you expect to owe.
If I can’t pay my taxes, does filing an extension even help?
Yes. There are separate penalties for not filing your taxes and for not paying your taxes. Since the failure-to-file penalties are worse, it still makes sense to file an extension and avoid those penalties.
Even if you can’t afford to pay a dime of your tax bill, file your taxes by the deadline (or file an extension).
What if I don’t file my taxes by the extended deadline?
If you file for an extension, but don’t get your returns completed and filed by the extended deadline, you’ll get hit with the failure-to-file penalties going all the way back to the original filing deadline.
I don’t feel comfortable filing an extension myself, can you do it for me?
Maybe!
If you’re a current client in good standing (you signed your engagement letter and paid your invoice), then we can certainly file your extension if you (or we) think you need it.
-Josh
