The Pros and Cons of Filing a Tax Extension
It is possible for tax payers not to meet the deadline to file their tax returns to the IRS. However, to avoid falling under the hammer of penalties for not meeting deadline, it is important that businesses, individuals file a tax extension. Filing a tax extension successfully will mean that your tax return will be processed without the penalties for late filings unless if they tax payer fails to file the return even after the deadline is extended by IRS. You can apply for a tax extension before the deadline if you realize that you additional time to file your tax return. Normally the IRS will grant about 6 more months in order to file your personal tax returns. It is important to note that while tax extension will give you additional time to file your return, it does not grant any extra time to pay taxes.
The Pros of Filling a Tax Extension
Before thinking of filing a tax extension, it is important to understand the pros and cons so as to make a good decision.
Reduction of Late Penalties
Filing a tax extension helps in the reduction of late penalties. For instance, it is important to note that IRS will impose a 5% penalty per month on any tax that is due plus half percent per month as late payment penalty. Apart from that, there are other penalties associated with late payment and filing a tax extension prevents it.
More Time to Finish Up
Filing a tax extension will give tax payers an additional 6 months to finish up their tax return application. This is good since there may be hitches during tax seasons like waiting for the arrival of an important tax document.
Improve Accuracy of Your Return
Because of the rush in getting to file your return done before deadline, there are high chances that mistakes could happen as a result of the rush. However, with a tax extension, you have additional time to look at it very well and ensure that everything is complete and fine before sending it.
Cons of Filing Tax Extension
The truth is that not everyone is eligible for tax extensions. For instance, some people in this category include those that got approval for offer in compromise.
Extension Does not Mean Extra Time To Pay
It is important to note that extensions are only meant to give additional time to file your tax return not to pay you tax due by original deadline. This means that tax payers can file extension to make their tax return and avoid penalties but any outstanding tax payment will still face a late penalty charge plus interest.
Married Couples Can’t Switch From Joint to Separate Returns
Filing at tax extension does not give married couples any extra time to change from joint to separate returns. What this means is that married couples who file by the April deadline can amend their tax return in order to switch to separate returns.
Filing an extension is not difficult and this is an advantage. For individuals, you can always use the Form 4868 for this purpose. If you are filing for an extension online, a confirmation code will be sent to you to confirm the IRS acceptance and extension granted.
Buy PDFelement right now!
Buy PDFelement right now!
- IRS Form 990-EZ: Read the Filling Instructions 2021
- How to Read and Understand Your Tax Forms 2021
- Tax Season 2021: How to Simplify Your Tax Prep Documents with PDFelement
- The Instructions to Fill out IRS Form 8840
- How to Fill IRS Form 8879