When it comes to your taxes, better late than never are words to live by. At Hacker Accounting we’d strongly recommend paying your taxes on time, but sometimes it’s hard to meet deadlines.
Luckily the IRS has got you covered: You can file for a deadline extension and get your taxes in later without incurring penalties. Here is the lowdown on when you should file for a deadline extension and why you should do it.
When You Can File One
You have until April 15th to file for a deadline extension. If April 15th falls on a weekend or holiday then your due date is the next business day after the 15th passes. Extensions will give you a 6 month period of time to prepare and file your return. You can file for an extension for any reason; the IRS will automatically grant your request so long as you complete Form 4868 on time. Be sure to check your state tax laws: Some states require you to file a separate state extension form.
Why You Should File An Extension
There are several reasons why filing for an extension is a good idea. One major advantage is that it gives you more time to ensure that your return is accurate. It also gives you more time if you haven’t received your W-2 in time or lost your W-R and are waiting for a new copy to arrive. You could estimate your income without your W-2, but it increases your chances of making a mistake that you could get penalized for later.
Getting an extension also keeps you from getting hit with failure-to-file penalties, which can be pretty harsh. Those fines can add up to 25% of the tax due. One thing to keep in mind: If you miss your extended deadline, you will be subject to this penalty.
You could also file for an extension if you want to get more tax savings. This can come in handy with IRA conversions: You can convert your Roth IRA back into a traditional IRA before your file your return, which lets you avoid paying tax on the balance. These conversions take time, though, which is why it’s best to file for an extension before embarking on this process.
And sometimes you just need to file an extension because life happens. There could be a death in the family, perhaps you had a child or got married or had your home wrecked during a natural disaster. Extensions can give you the time to need to deal with major life changes and personal crises and resolve them before putting your nose to the tax grindstone.
Related: How Health Benefits Affect My Taxes
Need help filing your extension? Give Hacker Accounting a call at 602-375-5251.