Need More Time To File Your Taxes? Take It!
Once again, the end of another tax season will be upon us. It’s a time of year that taxpayers (and accountants) hold dear. We, however, know that while tax season may be “officially” over, for some, there is still plenty of tax work to be done.
The first four months of the year are a busy time for accountants and, because we work closely with so many small businesses all year long, we are acutely aware of how much stress you are under to meet your first quarter obligations. This is why, instead of rushing just to get your taxes filed and out the door ahead of the April 15 deadline, we frequently recommend that our clients file for a tax extension. Unfortunately, there are some pretty nasty rumors going around about tax extensions. Hopefully, this slideshow will be able to debunk some common tax extension myths while helping those who opted to extend their deadline sleep a little better tonight.
Three Common Tax Extension Myths Busted
Myth: Filing a tax extension increases your chance of an audit.
Truth: Your chance of being audited by the IRS does not increase simply because you chose to file a tax extension. In the event that you are chosen to undergo an audit, taking the time you need to file a complete an accurate return, via an extension, will actually allow you to enter into the audit process with more confidence.
In our experience, tax extensions can be great for businesses that were overwhelmed by other critical responsibilities during the first quarter of the year. When you give yourself the luxury of filing an extension, you give yourself more time to compile all the information needed to make your tax return prep as worry-free and thorough as possible.
Myth: Tax extensions burden accountants.
Truth: Filing an extension not only gives your accountant extra time to check and double-check the work, it gives them the added time to provide you with better service.
Myth: There’s nothing to gain by filing a tax extension. It’s just a way to prolong the inevitable.
Truth: Filing a tax extension not only gives you more time to file your return with the IRS and state, it effectively stalls some of your other looming deadlines as well. For example, a tax extension can award you more time to pay your profit-sharing plan, defined benefit or your simplified employee pension plan as part of your retirement plan contribution. Once your extension has been filed, you will have more time to file your retirement plan contribution, all while claiming the deduction in your prior year’s return.
Want to learn more about whether filing a tax extension is right for you? Email the tax planning experts at Rea & Associates today to speak with a member of our tax team.
By Lesley Mast, CPA, MAcc-Taxation (Wooster office)