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5 Top Reasons to File a Tax Extension

With the April 15 tax filing deadline bearing down on you, there is no better time than now to get organized. If you don’t, you could find yourself up against the deadline, rushing around and hoping for the best.

If worst comes to worst, you can always file a tax extension with the IRS. This will give you more time to file your federal return, which may be just what you need.

Here are five of the top reasons to file a tax extension:
  • You don’t yet have all the information you need.
  • An emergency has prevented you from filing your return.
  • An organization or partnership has yet to send you the necessary forms, such as Schedule K-1.
  • You need more time to change your retirement plan or make contributions.
  • You hope to make elections on your tax return, but don’t yet know which strategy is best.
If you find yourself dealing with one or more of these situations, it may be best to take a step back and consider filing a tax extension.

While the above are five of the top reasons to file an extension, there are also “reasons” that should never enter your mind:
  • You think it will buy you more time to pay a tax liability. This is not true. The IRS gives you more time to file your return, but you are still required to pay any liability on time.
  • You know you are getting a refund and don’t want to waste your time filing. It may not harm you to file a tax extension, since you don’t have a liability, but why would you want to leave your money with the IRS? The sooner you file the sooner you can get the money in your hands.
  • It has become second nature. Believe it or not, some people file a tax extension every year out of habit. This year is the year you should put this habit in the past.
If you have a good reason to file a tax extension, don’t shy away from doing so. Just remember, you only want to take this step if you have a “good” reason, such as one of the five detailed above.
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Sunday, 01 August 2021

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