What should I know about a “Tax Extension?”
You can request an “extension” of time to file your income tax returns by filing a form with the IRS. Sometimes, copies of this form must also be filed with a state or city.
An extension does not give you additional time to pay the tax. You need to estimate the balance due and make a payment by the due date. Amounts paid after the due date are subject to interest and penalties.
If you are contributing to your Health Savings Account (H.S.A.) or Individual Retirement Account (IRA) you must make these contributions by the original return due date, April 15.
When individuals make estimated tax payments, the first payment of the New Year is also due on April 15. In most cases we ask clients to make their extension payment and the first quarter estimated tax payment together.
How much more time do I have, if I request an extension?
The due date for most returns is extended six months. That is: an individual 1040, due April 15, would be due October 15 if extended. Some extensions are due earlier. Ask your tax preparer about your specific return.
Don’t let this extra time slip away. Get your documents to us quickly, so we can give your return adequate attention. There is no second extension. We must have all your information by September 1 to meet the October 15 deadline. In some cases, we need the information in early summer.
If you are making estimated tax payments, it’s good practice to complete your return before the second payment is due, June 15.
Why are you recommending an extension?
In many cases, you may still be waiting for additional information (i.e., corrected 1099s, or Schedule K-1s,) to complete your return. Many financial institutions don’t finalize their tax reports until March. As the last people in line, this compressed time frame means we need additional time.
For some clients the complexity of certain transactions or tabulation of activities requires additional time.
In general, our time is limited when information is received late from numerous clients. We need to balance our workload to ensure all clients get the attention they need, so we can prepare complete and accurate returns.
Am I more likely to be audited if I extend?
Extending the time to file will not increase your likelihood of being audited. Rushing and filing an incomplete or erroneous return invites an audit. It is better to extend, so you have time to review the finished return carefully before submitting it to the IRS.
Are there benefits to extending my tax return?
It’s often less expensive, and less stressful, to file an extension rather than file an erroneous return, which must be amended later. If the information you provide us is incomplete, we must charge additional fees to prepare an amendment.
The extension may give you additional time for retirement planning opportunities or funding certain types of retirement plans. However, IRA contributions and Health Savings Account contributions must be made by the original filing deadline, April 15.
For more information, check out Tax Extension FAQs.