Filing for a tax extension can be a huge relief in many circumstances – they allow you an additional 6 months to file your tax return. The only problem with them is, some people are unaware of what they really do and do not do. This extension made to assist you can cause some serious backfire if you believe the most common myths about them. We’ve put together a list of the 4 most important things to know when making the decision to ask for an extension.
- Filing a tax extension is simple, and most people qualify.
All you need to do to file for a federal tax extension is complete Form 4868 and submit it to the Internal Revenue System (IRS). The form can be submitted electronically or mailed in – simple as that! If you have filled out the form before the April 15th deadline, you will most likely qualify for the extension. It is never necessary to explain why the extension is needed.
- It’s an extension to file, not an extension to pay.
With or without an extension, you are required to pay your taxes by April 15th. If you do not, however, the IRS will begin charging you interest on any outstanding balances beginning on April 15th, as well as a .5% failure to pay penalty.
Although a tax extension won’t pardon you from the failure to pay penalty, it can eliminate the failure to file penalty. If you don’t file your return by October 15, the failure to file penalty will kick in then.
- A tax extension can lower your rick of audit.
On the contrary, an extension can lower your risk of being audited because it gives you more time to look over your return and verify all the information. Don’t let your fear of drawing attention from the IRS keep you from asking for an extension if it will benefit you.
- You don’t have to wait until October 15th to file your return
A tax extension allows you until October 15th to file your return. This does not mean you cannot file it beforehand! Once you’ve prepared your return, you can submit it at any time. Even if you file for an extension and end up not needing it, it is always better to be safe than sorry.
Overall, filing for a tax extension will not harm you in any way. The key is to know what they entail and always meet your deadlines.