In assessing the analysis of a tax extension and what it entails, we are providing some of the definitions of what are needed to proceed with a tax extension. First and foremost, you will need to understand that an extension is only an extension of your time to submit your tax return; it’s not an extension of your time to pay the tax due. Unfortunately, many taxpayers miss this component about it not being an extension of them paying their taxes due.
There are two federal individual tax extensions that may be filed. The very first extension, which is “automatic,” is due through the April 15th tax deadline and is also a 4 month extension of your time to file. Therefore, should you file this first “automatic” extension; you will have till August 15th to file for your revenue taxes. Your better estimate of the tax that will be due with the actual return continues to be due by April 15th.
Are you aware that the first extension becoming “automatic” does not mean it really occurs on its own? You need to actually file the extension. There are many convenient methods to achieve this and are discussed later. The reason it is referred to as “automatic” is because you do not need to present a reason for why you require additional time to submit.
The second extension is not “automatic” like the first one. If you cannot complete your returns from the August 15th extension deadline, it is possible to “apply” for the next eight weeks. The second extension is considered an “application” because you need to provide a valid reason why you require additional time to file. You should explain that you put forth an effort to get your returns completed inside the first extension period or that you had extenuating circumstances. In case your application is denied, your return will probably be due immediately or within a 10-day grace period. If you didn’t file your first extension in a timely fashion, a second extension will only be approved in the event of undue hardship. When the cause is merely for your convenience, your request may be denied.
If you include the two extensions you are essentially give six more months to file past the April 15th tax filing deadline. Six months is usually the most time that your tax return could be extended for legal reasons.
Why wouldn’t you extend?
The Internal Revenue Service prefers that you simply file a complete and correct return. A return you must rush through, do not have all information for, or make estimates of figures for rarely is complete and accurate. Thus, it is advisable to file an extension if you’re approaching April 15th and you don’t have the information needed or otherwise cannot file total and accurate returns.
If you are using a tax professional and you are providing your tax information just a few weeks before April 15th, don’t let yourself be surprised if they indicate an extension will need to be filed. You are more prone to possess a complete and correct return if the tax professional is not trying to rush to meet the April 15th deadline.
Along with using a complete and correct return, there are certain preparing possibilities that can be utilized so you or your tax professional don’t have to rush through your return. One example is funding certain retirement plans, for example SEPs and Keogh Plans – it may be funded for that prior year through the extended deadline from the return that falls in the current year. Some plans, such as a SEP, can actually be established for your prior year up from the extended payment date with the taxes. You should note that traditional and Roth IRAs must be funded by April 15th to become qualified as contributions for that prior year. For more information on these preparing possibilities for years past, present and long term, you need to consult with your tax expert.
If it’s approaching the tax deadline and you’ve not yet contacted your tax professional, don’t let yourself be surprised if he or she is unable to talk to you when you call. Also, don’t assume that just because you utilized his or her services a year ago they are going to file an extension without you specifically requesting it. Tax experts are very busy working with numerous clients and having extended hours during tax season. Moving forward, you should look at getting into your tax professional’s workplace well ahead of the tax deadline to determine what he or she must file extra time, if necessary, and prepare your taxes.
If you are looking for additional information regarding a tax extension please visit our website. We are able to discuss in detail several tax preparing and business strategies for you, so email us now and let us help get you prepared for the future. On our site you can contact a tax extension advisor and/or Enrolled Agent that can provide you with all the tools you may need for a tax extension.