We are coming down to the wire – Tax Day is now just a day away. While most people have already filed their taxes, others are only just now ready to file. Still, there are those who will need to file an extension.
The reasons for filing an extension are many, but are often due to circumstances such as not receiving a necessary document on time or waiting on financial information to finalize. Regardless of the reason, extensions are available to those who qualify.
So what is an extension exactly? It is a request to the IRS to grant an additional six months to file one’s taxes. You may file at any time between April and October using the typical methods of paper filing, electronic filing, or utilizing the services of your tax professional.
There are some misconceptions surrounding extensions. The most common is that an extension gives you more time to pay. In fact, it does not. It does give you more time to file your return, but you are still required to give an estimated payment up front, which can be adjusted when your taxes are finally filed down the line.
Another misconception is that by filing an extension, you will create a red flag, making the IRS more likely to audit you. This is simply untrue. Your return is processed the same way, just up to six months after everyone else.
Finally, there is a false assumption that an extension will cost you money. An extension is free; in fact, it may even save you money. The extra six months can give you the time you need to find hidden deductions or other money-saving credits by being thorough. This will help you avoid making unnecessary mistakes or oversights which would otherwise necessitate filing an amended return.
So if you need an extension, don’t hesitate to request one. It is there for those who need it. Just make sure you make a payment regardless, then file when you can.