As the tax season comes to a close, many taxpayers will be scrambling to finish their returns. You may be tempted to request a filing extension in these cases, but you should understand what an extension will and won’t do for you.
Benefits of a Tax Filing Extension
An extension gives you six more months to complete your tax return. You can avoid the rush and schedule an appointment with your tax preparer during their slower time of year.
It’s free to request an extension, and the IRS will grant one automatically. You can also request an extension whether you are due a refund or owe taxes.
However, there are also some drawbacks to filing an extension.
Drawbacks of Tax Filing Extension
If you are owed a tax refund, you’ll have to wait longer to get your money if you file an extension. You could request an extension and then file your return in the next month or so, but it’s easy to put off your taxes until the next deadline comes around.
Things get worse if you owe taxes because you’ll be charged interest and penalties until you file your return. However, you won’t be charged the failure-to-file penalty if you request an extension and file by October 15th. This penalty is much higher than the late-payment penalty.
You could also forget to file your return entirely. There’s a lot of talk about taxes during April to remind you to file your return. In October, it could slip your mind more easily.
If you do file an extension, follow these tips to minimize the negative consequences:
- If possible, send in a payment with your extension request form. You may need to do some estimating to figure out how much you owe in order to do this.
- File your return as soon as possible in order to reduce the amount of penalties and interest you’ll need to pay.
- You can still file your return on time, even if you can’t pay your tax bill right now. Call a tax resolution attorney to discuss IRS payment plans and other options.
The Gartzman Law Firm offers tax return preparation and tax settlement help. Use our contact form to request a consultation with an Atlanta tax resolution attorney.