The deadline to file your taxes is right around the corner on May 17, extended from April 15. However, you may be questioning whether you should file a tax extension request with the Internal Revenue Service (IRS), which would grant you additional time to file your tax return. If the tax extension request is approved, your filing deadline is pushed to October 15. Although the date to file your taxes is pushed out, you are still required to pay any owed taxes by the tax deadline.
But under what circumstances should you submit IRS Form 4868 asking the IRS for a tax extension? AA Tax & Accounting Services has put together a list of common reasons for requesting an extension.
Incomplete Tax Documentation
Depending on your situation, you may have a lot of documents to procure to file this year’s tax return accurately. If you’re waiting on documents to arrive or you’ve misplaced the W-2 that your employer sent, you shouldn’t file and submit your taxes without it.
Instead, you’re better off applying for a tax extension with the IRS so you can properly fill out a tax return with all the necessary tax documentation to minimize the need for corrections.
Sometimes life just happens, and things get in the way. If you intended to file your taxes with the Internal Revenue Service by April 15, but life events delay your ability to file on time, you may want to consider applying for a tax extension. Unexpected life events include the death or illness of a family member, encountering a natural disaster, or other events that hinder your ability to file. Even though an explanation isn’t required to file for a tax extension, it’s best to only apply when you fit within one of these reasons.
Filing for a tax extension isn’t always for unexpected reasons. Sometimes you may opt to file for an extension as a strategic decision so that you can increase your tax savings. If you converted a traditional IRA into a Roth IRA during the tax year, you must pay taxes on the entire balance. To avoid paying tax on the total balance of the converted IRA, you can “recharacterize” a Roth IRA back into a traditional IRA. This process can take time, which means you may benefit from a tax extension so you can lessen your tax obligations.
Whether you file your taxes by the April 15 or October 15 deadline, you are required to pay back any owed taxes by the filing deadline. If your taxes aren’t paid by the deadline, you can expect to face expensive Internal Revenue Service penalties.
For each month after the missed deadline, you will owe an additional one-half percent on the amount of taxes owed. Missing the tax filing deadline also comes with penalties from the IRS, costing you an additional five percent per month, for a maximum penalty of 25 percent.
Tax Consulting Services in Cedar City, Utah
If you’re unsure whether filing for a tax extension is the right choice for you, we recommend consulting certified public accountants like AA Tax & Accounting Services for help making any decisions related to your tax return.
From one-time tax consulting services to ongoing consulting services, our tax consultants work with many clients as their tax advisor and tax preparer — ensuring that your tax team understands your taxes backward and forwards. You can have peace of mind knowing that our team has the experience to provide you with the most effective strategies for maximizing deductions and tax credits with our tax consulting services.
The AA Tax & Accounting Services team can help you execute the right tax strategies and decide if a tax extension is the best choice. Contact us to schedule an appointment.