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Filing a Tax Extension Is Ok, Really

Tax Extensions Buy Time To Prep Return, But Not Extra Time To Pay

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Filing a tax extension is not a big deal - not at all. It doesn't raise red flags at the IRS. It doesn't put you in the automatic "to be audited" file. I file an extension almost every year.

So why the heroic efforts to avoid filing an extension? I don't know. Here's what filing an extension will and won't do for you.

Filing An Extension Will Not Give You Extra Time To Pay

If you owe money, filing a tax extension will not give you extra time to pay. When you file the extension you should have an accurate estimate of what you owe, and should pay this amount by April 15th with your extension.

The extension buys you extra time to gather information and prepare a complete return - it does not provide you extra time to pay. In cases where you think you will owe, send in a payment along with your extension. If it ends up you didn't owe you can have the amount paid applied to the following year, or it can be returned to you.

I file an extension because spring is the busiest time of year in my business. I am busy providing tax information to my clients and their tax advisors, which leaves me little time to focus on doing my own taxes. I have far more time in the summer. Extending my return is convenient.

It can also make sense to file an extension if you are in a partnership or receive a K-1. In these situations you may not get the info you need until mid-March. Why rush, when you don't have to?

It Will Give You Extra Time To Prepare An Accurate Return

Although an extension doesn't buy you time to pay, if you need more time to gather information, extending can be a valuable tool that provides significant stress relief - it gives you an extra six months to prepare and file your tax return. Here's how you go about filing an extension.

Still not sure if it is ok? See the IRS page 7 Things About Getting More Time To File Your Tax Return.

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