Why Should you Consider Requesting an Extension to File your Tax Return Now?
As the 2022 tax season draws near to an end, many taxpayers scramble to complete and file their returns. Sometimes you can do the last-minute run-around and win. But in some instances, the last-minute drills won’t be enough for you to file the tax return before the deadline. The filing deadline for this year is April 18, 2022. Some states have a different deadline – April 19 – so check with your state and find out your deadline to file. Remember, the deadline to file is also the deadline to pay.
More so, the deadline to pay cannot be extended. So, even if you did not file by the deadline and requested to extend, you still must pay the taxes you owe. Failure to pay results in IRS penalties and interest on penalties. Estimate the appropriate amount and pay before the deadline. Everybody may owe taxes they don’t know about. Investigate until you are sure. This is important. If you are confused about any of this, contact me and find out how I can help you.
This article looks into some of the reasons you should or would ask for an extension to file. But first, how do you request an extension to file?
How to request an extension to file
Here is how the application for automatic extension should be done.
Individuals
- If paper-filing, print and mail Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, before the deadline.
- If you file electronically, your tax professional can e-file an extension request (Form 4868) for you before the end of the deadline day, April 18, 2022.
- Make a payment for all or part of your estimated income tax due. Indicate that the payment is for an extension to file using IRS Direct Pay, The Electronic Federal Tax Payment System, or a credit or debit card. The IRS will then send you a confirmation number for your records.
Businesses
- Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns
- Form 1138, Extension of Time for Payment of Taxes by a Corporation Expecting a Net Operating Loss Carryback
You can find more extension request forms on the IRS website for other types of taxpayers, such as U.S. citizens and resident aliens abroad who expect to qualify for special tax treatment or businesses requesting to file an extension for filing information returns.
Moving on, reasons to request an extension some days or weeks before the deadline are plenty. And asking for an extension to file may not be something to be ashamed of. It shows that you take your taxes seriously – more than someone who just ignores it or would instead submit an incomplete return just to beat the deadline. Nevertheless, if you had not decided to ask for an extension to file and still feel you are far off from completing and submitting your return, rather request the extension to file now. See the reasons below.
Why request a filing extension early?
You can’t file an extension after the deadline.
Whether you are filing individual income tax or business income tax, it can still get complicated. If it does get complicated, hire a tax pro. But if you still face challenges to complete your return, your tax pro is likely to recommend that you request an extension to file. This is because tax pros know you won’t be able to file this request after the deadline. It’s better this way, even if you complete your return and file just a week after the deadline.
Requesting this extension gives you (or your tax pro) the freedom to be thorough with your return. It gives you room to comb through your papers and even increase your deduction, thereby increasing your tax refund.
Missing tax documents
As you proceed to prepare your tax return, your tax pro may request for documents that seem difficult to get hold of. If it is the case with you and you can sense that you may not be able to catch the deadline, it is best if you can simply request an extension to file. The IRS grants this extension simply for asking. You would rather get extra months to complete your tax return than send it incomplete and risk making mistakes that can get the IRS to audit you.
Life-changing events
Being human means that we are vulnerable to many life events that can change our lives, temporarily or otherwise. Therefore, in the case of an unfortunate event such as the death of a loved one or you got into a life-changing accident, you obviously won’t be able to fully focus on preparing your tax return. You won’t even be able to cooperate with your tax professional if you hired one. It is also best to request an extension to file in such cases.
Do you have any questions about the above? Do you want to hire a tax professional to prepare your 2021 tax return? Talk to me today. I will talk to you and solve your tax return issues before the deadline.
Frequently Asked Questions
- Will IRS filing be extended?
Yes, if you request an extension to file, it will be given. You will have until October 17, 2022, to file. But there is NO blanket extension, as we have seen in the past two years when COVID-19 was at its peak.
- What happens if you file taxes late but don’t owe?
If you file taxes late and don’t owe taxes, you will not be penalized because penalties are charged on the tax you owe. However, if the IRS owes you a refund, you will not get it until you file. More so, if you don’t file, there will be no statute of limitations on you, meaning the IRS can audit you going back to as many years as they want. This could be bad for you.
- What is the penalty for late tax filing?
Late filing penalties can go for up to 5% of taxes due for every month you are late. But the total penalty fee cannot exceed 25% of the tax owed.
- What is the IRS Fresh Start Program?
It refers to IRS debt relief programs to help taxpayers clear their tax debt and penalties legally.
