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Financial Planning Insights

Tax Extension FAQs

By The Chandler & Knowles Team | | 0

The Internal Revenue Services gives you, the taxpayer, some options when it comes to filing your tax return. You can file your tax return on what the United States knows as “Tax Day” which is April 15th, or you can elect to do an extension by this day. The extension will give you the opportunity to have more time to file your taxes.  

What is a Tax Extension?tax extension papers

A tax extension is just like it sounds, it is an extension of the tax deadline. When you are unable to file your taxes by the standard tax deadline set by the Internal Revenue Service, an extension needs to be put into place.  

A tax extension is a filing you make with the Internal Revenue Service to let them know you need more time to prepare and file your tax return. Individual taxpayers are given the opportunity to file for an extension on or before “Tax Day” and get an extension until October 15th to file their individual tax returns.  

The Internal Revenue Service will give an automatic approval of the tax return extension as long as you file the form with the organization. At the state level, you also need to file for an extension for each state to which you will owe a tax return in that tax year.  

Why Would You File for a Tax Extension?

The great thing about the ability to file for a tax return extension is you do not need any reason. You can obtain an extension on your tax return just because you would want to. You may file your extension request because you simply need more time to get your documents together by tax time.  

You may be out of town during tax season, or your schedule just does not allow you to get everything in order for the filing. An extension may also be necessary if you do not have an accurate document you need, such as a Form 1099 or Schedule K-1. Whatever the reason may be, you do not need to disclose it to the Internal Revenue Service.

How To File for the Extension

You can file a tax extension to the Internal Revenue Service and at the state level simply by filling out a form. The Internal Revenue Service Form 4868 is all that is necessary to file for the extension. You can file the extension request electronically or via paper. The requirement stated by the Internal Revenue Service is that you file the extension request on or before the filing deadline for that tax year.  

Is There Any Impact To Filing a Tax Extension?

file tax extension You get a lot of benefits from filing a tax return extension request. The extension request gives you more time to gather documentation, review your return, and get it right before filing it with the Internal Revenue Service.

Filing an extension also lets you avoid penalties the Internal Revenue Service can assess for not filing your taxes on time.  

In the event, there are retroactive changes to the tax law that occur after the filing deadline. a tax extension lets you benefit from these. If you file your taxes before they are put into place, you would need to amend your tax return to take advantage.  

Additional Considerations to Make as an Individual

You need to take into account your full situation as an individual taxpayer. What is the status of your tax return? Are you in line, if you file now, to qualify for a tax refund? Would you owe money to the Internal Revenue Service if you file your taxes now? Timing is critical when it comes to filing a tax return. For some, an extension may make a lot of sense. For others, a tax extension could create issues or leave you waiting for money the Internal Revenue Service owes you (your tax refund).

The best thing you can do for yourself as an individual taxpayer is to plan out your taxes. Before you file for an extension, do some quick math or work with a Certified Public Accountant to better understand your situation. Will you qualify for a tax refund or will you owe money to the Internal Revenue Service? When you have this information, you can see the feasibility of filing your taxes by the deadline. If you cannot, a tax extension may be the right move. Knowing how, why, and what the net impact is will help you make a decision.

For assistance with your tax return and tax preparation needs, the team at Chandler & Knowles is able to assist. Contact our team today to get started.   

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