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The Consequences of Filing a Tax Extension

The Consequences of Filing a Tax Extension

If you want to file an extension request by adopting IRS Form 4868, request that the IRS provides you with additional time for filing your tax return. Some individuals automatically enjoy automatic extensions. These set of people include military men serving abroad. Except in unique scenarios, additional extension requestions may still be honored. There is not even point providing reasons for requesting an extension.

An extension shifts the filing due date for individual tax comes back from April 15 to Oct. 15. In any case, is requesting for one a smart move? You probably won't have a decision under certain conditions. However, there are two upsides and downsides. 

While an extension gives you an additional opportunity for filing return, it doesn't give you further opportunity to pay your tax. Payments can still be made by April 15, 2019, for the tax year 2018. An extension can help decrease your punishments if you can't bear to pay in full by the due date. 

The Pros of Filing an Extension 

1. You'll Have Six Additional Months to Finish Up 

Having additional opportunity to complete your return is frequently essential in case regardless you're sitting tight for tax files to arrive via the post office or if you need extra time to sort out your deductions. Extensions likewise give additional opportunity to file a tax return on your gift whether you've been exceptionally liberal amid the year. 

2. It Helps Reduce Late Penalties 

The IRS fundamentally forces two sorts of punishments: a late recording penalty of 5 percent for every month on any tax due starting at 2018, in addition to a late payment penalty of a half percent a month. 

On the off chance that you file an extension and, at that point present your arrival by the due date of Oct. 15, you'll skip the 5 percent for each month late filing punishment. What's more, the late recording punishment will start from Oct. 15, which makes a deferral on this punishment if you submit after Oct. 15. 

3. It Preserves Your Tax Refunds 

A few people end up recording quite a long while late, and there's a three-year due date for accepting a refund check from the IRS if things being what they are, you're expected one. This three-year legal time limit starts on the first filing due date—April 15, 2019, for the tax year 2018. 

In any case, the refund due time limit is likewise stretched out by a half year when you file an extension. This can safeguard the capacity of taxpayers to get their government tax refunds regardless of whether they're behind with presenting their tax returns. 

4. It provides the Self-Employed extra Time to Fund Retirement Plans 

Independently employed people should need to support SEP-IRAs, solo 401(k)s, or SIMPLE-IRA plans for themselves. Recording an extension furnishes these taxpayers with an extra a half year to do as such. 

SIMPLE plans and Solo 401(k) must be set up amid the tax year; however, financing the arrangement can happen as late as the all-inclusive due date for the past tax year. Business people can open and store a SEP-IRA for the earlier year by the extended due date insofar as they've filed an extension. 

5. You Have More Time to Make Different Elections on Your Tax Return 

A wide assortment of choices must be made when you're setting up your tax return, and it can take some work and possibly an interview with a tax preparer to decide if you're fit the bill to make certain credits and deductions. Filing an extension gives you additional opportunity to think about it over or to find a tax preparer for help. 

The Cons of Filing an Extension 

1. Additional Time to File Doesn't Mean Extra Time to Pay 

An extension will give you additional opportunity to file the return, yet any tax you owe is still due by the first due date. An extension can help lessen punishments, yet any remarkable parity will even now be charged a late payment punishment of 0.5 percent monthly and interest.

2. There's No Additional Time to Fund an IRA 

Commitments to a conventional IRA and Roth IRAs are still due by the first April due date. 

3. No Additional Time for Married Couples to Switch  Separate Returns from Joint Returns.

Married taxpayers filing together by the April due date still have until April 15 to correct returns back to change to the married filing independently status. 

4. You Might Confuse the IRS 

The IRS may believe that you have to file a tax return whether you file an extension. If you end up not documenting, maybe because for reasons unknown, you don't meet the filing prerequisites, so it's merely a bit much, the IRS may get confounded and request that you file a return in any case since you filed an extension to require extra time. 

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