Whether you're a business owner or an individual, it's completely normal to request more time to file your federal income tax return. In fact, over 10 million taxpayers request tax extensions each year. Let's take a closer look at tax extensions, what's involved in the filing process, as well as a couple of FAQs. And if you would like more personalized or tailored guidance based on your unique situation, don't hesitate to reach out to the team at the MB Group today.
What Is a Tax Extension?
Since 1955, the “Tax Day” in the US has been April 15th. But if you feel you'll be unable to file your taxes by this day, you have the option to file an extension, which will provide you an additional six months to file your taxes. Tax extensions effectively move your tax filing date from April 15th to October 15th. You do not need a specific reason to file an extension, and the IRS automatically grants them as long as you complete the necessary paperwork on time.
What Are the Reasons to File a Tax Filing Extension?
When you file for an income tax filing extension, you don't necessarily have to specify why. Even so, some of the most common reasons include:
- Life is too busy
- Want to have more time to optimize the tax return
- Need to track down missing documents
- Unexpected life events
Are There Benefits to Extending My Tax Filing Deadline?
Many people feel that requesting a tax extension is inherently a bad thing, but there are actually a handful of benefits.
File an Extension & Optimize Your Returns
By filing a tax extension, you'll not only have more time, but you can alleviate some stress associated with tax time. More time also means you can meticulously review your tax return and make sure you're maximizing all the benefits available to you.
Avoid Penalties by Filing an Extension
Another reason to file a tax extension is to avoid costly penalties, such as the 25% failure-to-file fee. However, if you do file an extension and fail to file by the extended deadline, you will be expected to pay this penalty. It's important to understand that when you file an extension, you're only getting extra time to file. This does not mean you have more time to pay, and your payment will still be due at the deadline.
Capture Retroactive Active Tax Changes
When you file a tax extension, you may be able to utilize retroactive changes to the tax law implemented after the deadline. This strategy would allow you to do so without the expense or added time associated with filing an amendment.
Does an Extension Increase Chances of Being Audited?
Contrary to popular belief, most tax specialists and experts theorize that filing a tax extension actually decreases your likelihood of being audited. This sentiment is based on the fact that IRS auditors are required to meet audit quotas every year. And when you file an extension, your tax return may fall outside the quota window.
Will I Get Penalized for Filing an Extension?
No, there are no penalties associated with filing an extension. If you owe taxes, however, it's imperative you make the required payment on the due date. As we previously mentioned, the extension applies to your tax filing deadline—not the due date of your tax payment. Failure to make a payment on time can result in additional penalties.
How Can I File An Extension?
Filing an extension for your filing deadline is easy and can be executed in different ways based on your unique situation. In general, you can:
- E-file your federal tax extension in a matter of minutes with the tax-filing software you use.
- Print and mail your completed IRS extension form. This option is used by those who are not comfortable with e-filing. To do so, print out IRS Form 4868: Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. Once you complete the form, you can forward it via mail to the proper IRS address for your respective state.
- You can also file Form 4868 electronically with your tax professional or through your tax filing software.
Contact the MB Group Today for Tailored Tax Planning Solutions
When it comes to ensuring your taxes are optimized, you're not alone. In fact, you have an entire team of support at the MB Group. As an experienced team of CPAs and accountants, we specialize in helping businesses and high net worth individuals minimize tax liability and maximize return. And if you need more time to file, we make the process as easy as possible.
Contact the MB Group today to learn more about how we can help you get the most from your tax return.