For many, the endless responsibilities of daily tasks get in the way of prioritizing income tax preparation. It’s during the short tax season that stress peaks and failure to make the right moves can mean paying more than you should.
How you handle your tax return during the regular filing season impacts whether you pay penalties and interest. Far too many people miss the opportunity to avoid late filing penalties but submitting a timely extension is one way to keep more of the money you earn.
What is an extension?
An extension is a request for additional time to submit an income tax return. This applies to individual and business income tax returns that will not be in by the tax filing due date.
When to use an extension?
It is best to request additional time to submit your taxes if you are near or at the deadline without all of the documents you need to file an accurate return. For example, if you own a business but cannot locate bank or credit card statements to update the accounting and prepare accurate reports, apply for a tax extension while you request copies of missing documents from the bank and credit card companies. Getting an extension is also handy if you need to replace missing W-2s, 1099s, or receipts for tax-deductible expenses.
How an extension works?
In order to qualify for an extension the request must be submitted by the original due date of your income tax return. There are different forms required for individual, corporate, partnership, REMICs and Trusts. You can find the right form at the Internal
Revenue Service’s website. The extension request can be submitted electronically, by paying part of your estimated tax due, or with a request by mail.
What to expect after you get a tax extension?
When the IRS grants an income tax extension you should continue the process of completing and sending in the income tax return. Two things occur as a result of having a request accepted. First, for taxpayers who are granted the request, the IRS will
waive penalties that would normally apply for filing a late income tax return. But it is important that you get the return in by the extension due date. Otherwise, penalties will apply after that time.
Additionally, if you will have a tax due, the interest on your balance will accrue from the date of your original filing. So if your normal tax due date is April 15th, interest begins to accrue on the balance for any date thereafter.
There are no shortcuts for filing accurate tax returns but you can stay ahead of the game and be on time by keeping your books up to date throughout the year. Download a
free tax organizer to help you prepare for tax season here.
Copyright (c) 2018 Benita Tyler