If you are struggling to get your taxes filed because you are self-employed and going through your records, own a business, or you simply haven't had the time, you might be able to file for an extension. This gives you additional time to file your taxes and not get hit with massive penalties from the IRS. Here are some pros and cons of asking for an extension.
Pro: You can reduce your late penalties
The IRS will charge you a late filing penalty if you fail to file by the original deadline. This will be a percentage of the amount you owe that is added on for every month you did not file your taxes. There will also be an additional late penalty each month for not paying your taxes. However, if you request an extension and are approved for it, you get several more months to file your taxes and won't face such harsh penalties.
Con: You won't have extra time to pay
One thing people don't realize is that getting an extension means extra time to file, not extra time to pay. The IRS still expects you to pay the taxes you owe by the original date it is due. You will have fewer penalties overall, but they will still charge you a small late penalty for not paying on time and may also charge an interest. The interest is typically a small percentage of the total amount you owe, added on annually.
Pro: You have extra time while waiting for essential documents
If you failed to receive the right tax documents, are working on your deductions, or you lost your original tax documents and had to request new ones, you will need more time. Just before the April deadline, the IRS is busy and might not get those documents to you by the deadline. It can help to request an extension instead and give you several months to receive the documents and get your deductions in order.
Con: Not everyone is eligible
Just because you apply for an extension doesn't mean you will be approved for one. The IRS has certain eligibility requirements that might keep you from getting the extension. This is not only a disadvantage because you won't get the extension, but also because you might put off finishing your taxes because you assume the IRS will give you extra time. This could make your taxes even later than they would have been originally. If you have any doubt you will be approved, contact a tax professional like Dale K. Cline, CPA PLLC. They can help you apply and prepare your taxes if they don't think you will get the extension.
Pro: Your tax return will be accurate
One of the biggest problems with rushing through your tax return is that it might not be accurate. You may miss things or make the wrong calculations. The best way to have a fully accurate tax return is to have plenty of time to do it. Getting the extension gives you a little more flexibility so you can be sure it is done right.Share