In today’s fast-paced life, it is often easy to get caught up in the rush and not be able to complete important tasks like filing your tax returns. There may be other factors as well like unexpected events or incomplete documents, but one thing you need to note is that a tax extension only gives you more time to submit your tax returns to the Internal Revenue Service. You still have to pay your tax dues by the deadline.
As long as you fill Form 4868 and submit it to the Internal Revenue Service, you are eligible for a six-month extension to file your tax returns.
The point is to allow you more time to give your returns properly and here are the few reasons why you should ask for an extension to do so from the Internal Revenue Service:
If there is some information missing from your tax forms or you have lost your forms and are waiting for the new ones to arrive, you can always file for a tax extension. It is better to fill your forms properly rather than face an audit by the Internal Revenue Service.
In case you are still awaiting some information, you can always ask for an extension from the Internal Revenue Service for information returns that can vary from a month to six months, depending on the information forms in question.
At times, there are circumstances that occur that are beyond our control like an illness or a death in the family or a. In such situations, you may not be able to complete your tax returns or file them on time. It is best to ask for a tax extension in such circumstances and avoid any unnecessary penalties.
When you go out of town during the tax season, you do have the option of electronically filing your tax returns. Yet at times you may not have all the information you require to fill the return electronically or you may not have access to the internet. In such cases, you should file for an extension to fill out your returns properly when you come back.
You may have converted your traditional individual retirement account (IRA) to the Roth IRA to avail the free tax benefits. But, what you didn’t realize was that you have to pay tax on the entire account balance at the time of conversion. If you want to change your account back to a traditional one, it will take time and you may miss your tax return deadline. Therefore, it is better to file for an extension for your tax return.
At times there are changes in the tax laws which could be beneficial for you or your business but you may not have enough time to gather all the documents in time to file your tax returns. In such circumstances, you can file form 3115 along with the tax return in order to change the methods of accounting. This is done so that you are granted an extension and don’t incur any losses.
Form to file: If you want an extension to file your tax forms, you need to ask the Internal Revenue Service for form 4868. Your extension will be processed automatically when you pay the small part or all of your estimated tax electronically.
E-File extension: You can request for a tax extension for your return via an e-file using tax preparation software. You can create this e-file yourself or hire a tax preparer who has the software. An electronic request for tax extension will be acknowledged by the Internal Revenue Service.
If you have asked for a tax extension from the Internal Revenue Service, and think that you can delay your tax payment as well, you should be wary. Any delay in payment of tax will invite a hefty fine from the Internal Revenue Service that amounts to a monthly penalty of one-half percent on the tax that you still owe them.
It is always wise to pay all your tax dues before the deadline even if you have applied for a deadline. Once the payment is made, your extension will be taken into account and you will be refunded whatever is due to you.
In case you fail to submit your tax returns even after an extension, the Internal Revenue Service will make you pay a penalty of 5 per cent per month on the tax or in some cases, it can even go to 25 percent. Avoid such hefty fees by filing all your returns either on time or within the extension date.
ERNIE BUSTAMANTE