Should You File for a Tax Extension?
If tax filing season is upon you and you aren’t quite ready to file, you may be able to file for an extension. This allows you more time to get the documents you need, request forms you don’t currently have, and to go through your accounts and deductions. Here are some things to know about filing for a tax extension.
Helps Reduce Late Penalties
One thing to know about requesting a tax filing extension is that is helps to reduce late filing penalties. There are penalties for filing your taxes late and paying your taxes late. Penalties alone can sometimes be up to 20% of what you owe.
You prevent paying late penalties if your extension gets approved.
Extra Time for Documents
One of the larger benefits in requesting a tax extension is that you have a vast amount of extra time to gather important documents. Maybe your tax documents got lost at the post office, and might need to request additional copies from the IRS. This request can take up to several months from the IRS, especially if it is primetime tax filing season. The IRS office is extremely busy around tax time.
This extension gives you some cushion to get important documents together to file your taxes. It also helps when you have a lot of deductions or if you run a small business and need to gather your tax documents from your accountant.
The More Time, The More Accurate
Being granted a tax filing extension can also grant you a more accurate tax return. When rushing to finish your taxes, you often miss critical deductions and credits. This only ends up hurting you in the end, and your wallet down the line. The best thing you can do is get an extension so you can take your time preparing for your taxes.
If you need assistance with your taxes, file an extension to buy yourself more time. While it is an extra step, requires additional paperwork and hurdles to overcome, you’ll be better off in the long run.