There are several different reasons to file an extension on your taxes. Although many people feel very pressured to file their taxes by April 15th on the dot, the IRS will grant you an extension regardless of your circumstances just for asking. However, there are many things you need to consider before you file an extension – it’s not the best option for everyone. Here are some circumstances in which filing an extension will be very beneficial to you.
Unforeseen Circumstances
You likely planned on filing well before April 15th, but sometimes life just gets in the way. Maybe you had a family or medical emergency that you had to deal with, or changes in your employment or living situation. Maybe you have had to deal with a natural disaster or other crisis in your community. You may even have been overwhelmed with a busy project at work. Whatever it is, you don’t need to stress about filing right away if your life is getting overwhelming. You can file an extension to give yourself more time.
Travel
If you know you are going to be out of down on the filing deadline, it is probably best just to wait and file an extension so you can file when you return. This is especially important if you will be traveling outside of the United States, because you won’t know exactly how your internet will be or if you will even have access to the technology you will need to file.
Missing/Incorrect Documentation
If you don’t have the correct pieces of documentation for your taxes, you should file an extensions so that you can get them. For example, you may have a missing W2 from an employer, or may need to make changes to certain pieces of tax documentation. You could be fined or prosecuted by the IRS for providing incorrect tax information, so it is very important that you take the time to get things right.
How to File an Extension
If you have decided that you would like to file an extension, there are a few steps you will need to take. You will need to obtain and fill out form 4868, which is the IRS’s automatic tax extension form. You will then need to either mail your form in or file it electronically using one of the many e-filing services that have been approved by the IRS. Once the form has been filed, you will get your extension automatically – it does not need to go through any approval process. If you pay the estimated taxes that you owe by the appropriate filing date, you also do not need to file an extension – one will be processed automatically. However, it is recommended that you file an extension anyway just to avoid any confusion and have everything on record.
Benefits of Filing an Extension
There are many benefits to filing an extension. If you are busy and just can’t find the time to get all of your taxes prepared by the deadline, an extension will bring you the peace of mind you need during a stressful time. You will be able to go through the tax preparation process without feeling worried or rushed. You will also have much more time to make sure that all of the information on your return is completely accurate. Not only will this give you more time to ensure that you claim everything that you are legally allowed to, but you will also avoid fees that could potentially be extremely costly. Therefore, you will likely save money by filing an extension if you have been rushing to complete your return on time.
When Not to File an Extension
There are a few instances where you should avoid filing a tax extension if you can. You should never file a tax extension if you cannot pay your taxes. An extension will give you the extra six months to file your tax return, but it does not give you any extra time to pay your taxes. If you owe any money, it will still be due on April 15th. If you are having any trouble paying your taxes, you should talk to a tax professional to see what a good solution to this problem will be. There are a few different extension options for your payments, but these are much shorter and need to be filed separately.
If you have any questions about filing an extension, or just filing your taxes in general, contact your local CPA. They can help you with your tax needs for both individuals and small businesses.
