There are only a few days left to file your taxes for the year ending 2023. How prepared are you? Before you go ahead and file, consider a tax extension—you could benefit from it.
Tax season puts you in quite a stressful situation. Like other filers, you’re planning to spend the next few days getting all your documents together. You may consider scheduling a meeting with your accountant (if they are available). Otherwise, you may plan to file them yourself using a purchased tax software.
You might be wondering if it makes sense to file an extension.
This blog will explore what you should consider before filing an extension.
A tax extension is a mechanism offered by the IRS for individual taxpayers. It allows you to wait 6 months before you file your taxes. This is often helpful for those waiting for documents to come in or having been too busy to assemble all their documents.
Here are some situations in which you might want to file an extension:
You feel rushed.
There is a reason you have put off filing your taxes. It takes time to gather and organize your records and documents and time to file your taxes with the IRS. Rushing this process could lead to errors, and errors can lead to penalties.
You are in a disaster area.
If you have been struck by a natural disaster, filing your taxes will be the last thing on your mind. The government is aware of that and will automatically approve an extension if you are in a disaster area.
You are in the military and living abroad.
It’s difficult to file your taxes in this situation; many times, you aren’t near any government offices or nearby tax resources.
You had a life-changing event.
Life happens. Whether it’s a medical emergency or a personal matter – taxes are the last thing on your mind.
You procrastinated and would like to have a tax professional review your taxes but can’t get an appointment.
Other reasons why you would need to file for an extension can be:
● You’re still missing important documents like W-2 forms, 1099 forms, or K-1 schedules that need time to gather, especially if you need to file for an accurate return.
● Reducing your taxable income through IRA contributions or retirement accounts – you may need time to decide on this before filing.
As soon as the deadline comes, you may find yourself either deciding to file late or rushing to get them in. However, filing in a rush can do more harm. That’s why filing for a tax extension is a more ideal course of action.
Late filing can result in penalties—you don’t want to pay an additional hefty amount on top of your taxes. Check your schedule and see if you can file. If not, apply for a tax extension instead. Your filing can still be considered despite going beyond the deadline as long as it’s within the specified extension dates.
Another concern is the accuracy. Rushing to meet the deadline can lead to errors on your tax return. An extension gives you more time to gather documents, carefully review your return, and minimize the risk of mistakes.
Do you also want to maximize your taxes? Going for an extension gives you extra time. You could spend it gathering the necessary files and requirements. Then, you can process deductions and credits which you deserve.
No, there is no penalty for filing a Tax Extension. But filing for an extension doesn’t mean you don’t have any tax obligations. You still have to pay. Do your best to understand your tax obligation, and if you owe taxes, remit a check to the IRS.
Remember that tax payments are due on April 15, 2024, for your 2023 Taxes. If you file beyond that, any taxes that are due can accrue interest.
Here are the important steps in filing for an extension:
1. Gather all the necessary information. This includes the tax liability and any other tax payments you already made. Your Social Security Number (SSN) is also important.
2. Choose a filing method. You can do this electronically or by mail. Or have a tax professional file the extension for you.
3. Then, submit your extension request before the tax filing deadline (usually April 15).
When do you plan to file your taxes? Whether you choose to file your taxes on the traditional tax filing date or you want to file an extension, it’s a good idea to speak with a tax professional at Accolade Accounting.
When it comes to reliable accounting services in Atlanta, GA, look no further than Accolade Accounting. With a highly experienced accountant team, we have assisted numerous businesses in developing and implementing effective accounting systems. If you need expert guidance, don’t hesitate to contact our certified public accountants, call 470-646-2663
