Tax extension is not a cure-all contrary to what most people believe. If you do not have the money, then file an extension. Or if you are still trying to get everything in order, then you can file an extension. Tax extensions, however, are not what they sound like, and they are not really the cure-all. Here are facts about filing a tax extension that you should know before you file.
It is not an Extension to Pay
The word extension can be misleading. When you file a tax extension, you will get six extra months to file your tax. This sounds reasonable. The keywords here are that you have additional months to file the taxes. Tax extensions do not extend the deadline to pay the taxes that you may owe the IRS. If you file an extension, you still have to pay all taxes due by the normal tax deadline. Therefore, before filing an extension assuming you have six extra months to pay your taxes, think again.
Reasons do not Outweigh Benefits
Unless there are some pieces of paperwork you are waiting to arrive in the mail, an extension will not deliver the benefits you may expect. If you have procrastinated during the tax season, the solution is not an extension. You may end up costing yourself more money and frustration by asking for more time. The best thing to do is to buckle down, gather the documents, go online and file.
No Extension for IRA Contributions
If you think you have found an IRA contribution loophole in the tax process, think again. Filing an extension does not extend the time you can make IRA contributions and get tax deductions for your contributions. The deadline for making IRA contributions is the tax deadline.
The penalty is on the Filer
When it comes to tax, the IRS wears the zebra stripes. Although you are technically penalized a fee for submitting the tax extension paperwork, there could still be a downside to filing a tax extension. If you file an extension, but you have got a grasp on your situation, and you are sure of a tax refund then you do not have to worry. The government will hold on to your refund until you sort your paperwork during the extension period.
If, however, you file an extension and choose not to pay what you owe by the tax deadline, IRS will charge you a failure-to-pay penalty and interest on the tax you owe.
You can Request Extensions Using Turbo Tax
Most people still think that the only way of filing for an extension is the paper method. However, you can request an extension using Turbo Tax Easy Extension for free. Ensure you go online and file an extension by the tax deadline. You will receive an email confirmation when the tax extension is accepted.
These are some of the important facts about filing tax extensions that you need to be aware of before filing a tax extension. If you can, just file your taxes. You can also make use of the Turbo Tax to make it easy to file your taxes.