There are a plethora of reasons why people need additional time to file their personal tax returns and simply cannot make the April 15th deadline. For example, you may still be waiting for your tax documents to arrive in the mail. Maybe you need more time to organize your deductions. Perhaps you have procrastinated to the point of no return, pun intended. There may even be some mitigating factors in play that are preventing you from filing on time. If you happen to fall within any of these categories, do not stress out too much about it.
There are absolutely zero reasons to fear the worst, although you must officially file an extension request using IRS Form 4868.
The good news is that most extension requests are honored, and you are not required to provide an explanation as to why you need it. The extension moves the filing deadline for personal tax returns from April 15th to October 15th, which should provide you with the additional time needed to complete your personal tax returns. You may be asking yourself at this point if taking an extension is a smart move.
The following information will provide you with the top three few reasons why filing an income tax extension may be your best option.
Filing An Income Tax Extension Helps Reduce Late Penalties
The Internal Revenue Service is kind enough to inflict not one, but two late penalties for people that fail to file their personal tax returns on time. The first is a late filing penalty of 5-percent per month on any tax amount that is due as of 2018. On top of that, there is a late payment penalty of a half percent per month. The good news is that if you file an extension, and then file your tax return by the extended October 15th deadline, you will avoid the 5-percent per month late filing penalty. In addition, the late filing fee of 0.5% will begin on October 15th. In essence, it defers this penalty if you file after the extended October 15th deadline.
Filing An Income Tax Extension May Improve The Accuracy Of Your Income Tax Return
Generally speaking, when people rush to complete a task they tend to make mistakes. This holds true for big important tasks and smaller less important tasks. Your income tax return is one of those big important tasks by the way. If you cannot comfortably file before the April 15th deadline, it may make far more sense to file an extension. That will provide both you and your accountant the additional time needed to go over the return in a thorough manner. It will also ensure that your tax return documents are both accurate and complete prior to sending them into the government.
Filing An Income Tax Extension Provides More Time To Make Various Elections To Your Tax Return
There certainly is a vast array of decisions to be made when you are preparing your income tax returns. Filing an extension provides you with the additional time needed to determine if you are qualified to take particular credits and or deductions. This holds especially true if you have a last minute appointment with your certified public accountant, and do not have the proper amount of time to review everything. The extension may actually make the difference of receiving a larger tax return check if you are a W2 employee or spending less money paying taxes if you are self-employed or a 1099 consultant.
In conclusion, you should always consult with a professional accountant or tax preparation service in order to determine if filing an income tax extension is truly your best option. If you need further advice or are searching for a new certified public accounting firm that puts the needs of their clients first and foremost, please contact Swartz & Reeder Advisors today by phone – (847) 241-5800; email – Info@SwartzReeder.com, or visit our website at www.reedercpagroup.com