The Value of A Tax ExtensionApr 03, 2023
Ok fellow taxpayers, let's start with a quick check-in.
We are inching closer to the 2023 tax deadline. How are you feeling? Hopefully, you’re not feeling too stressed. If you are starting to sweat, just know you are not alone. Many taxpayers in the United States struggle to file their taxes on time. It is essential that you know what filing an extension actually allows you to do and, more importantly, what it does not allow you to do.
No, it does not necessarily put a bullseye on your back for an audit!
Reasons for Filing a Tax Extension:
- Lack of time: You may need more time to get organized or collect missing information. In fact, the IRS recommends filing an extension if your employer has not sent your w-2 in time. It’s ok to take more time. We all have those days.
- Complicated tax situation: Your situation is complex since you’re following TTF, which shows you have a lot on your plate. If you have just started working with Chris and Shawn at Integrated CPA, they may recommend an extension. This extension allows them the time to implement strategies and make any necessary changes. If you don’t have a CPA in your corner and have questions, you can always schedule a TTF Urgent Care Express meeting.
- Travel, health, or other unexpected issues: As a father of 4, I understand entirely when the unexpected comes up. I remember breathing the most profound sigh of relief when the IRS announced a delay in Tax Day in 2020, as I was sitting in the hospital holding my newborn son, panicking about taxes! Regardless, there is no stigma around simply saying, “I need more time to file.”
How to Request a Tax Extension:
Filing an extension is pretty simple. Just fill out FORM 4868, available on the IRS website or here (https://www.irs.gov/pub/irs-pdf/f4868.pdf). This form asks for basic information such as your name, address, and Social Security number, as well as an estimate of your tax liability for the year.
Once you have completed this form, you need to submit it. You can do this electronically or digitally through the IRS website. If you submit digitally, make sure you save the confirmation email. If you mail it, ensure it is sent certified.
🚩 What to Do After Filing for an Extension (MUST READ!!):
First off, take a breath. You did it. But you are NOT done.
You now have until October 15th to file your taxes. That being said, you still must make an estimated payment by April 18th. That’s right, to avoid penalties and interest, you should still pay your estimated tax liability by tax day.
Frequently Asked Questions:
1. What happens if I do not file for a tax extension or file my taxes by the deadline?
If you do not file for a tax extension or file your taxes by the deadline, you will be subject to penalties and interest on any taxes owed. These penalties can amount to up to 5% of your tax liability, so file for an extension as soon as you think you need it.
2. How much time does a tax extension give me to file my taxes?
A tax extension gives you an additional six months to file your tax return.
3. Do I still have to pay my taxes by April 15th if I file for a tax extension?
Yes, you should still pay your estimated tax liability by April 15th to avoid penalties and interest.
4. Can I file for a tax extension if I owe taxes?
Yes, you can still file for a tax extension if you owe taxes. However, you should still pay your estimated tax liability by April 15th to avoid penalties and interest.
In conclusion, filing for an extension is not a bad thing, and taxpayers do it every year for many reasons. The IRS actually will not ask you why you are asking for it, so do not feel guilty about asking for time.
If you have questions, please visit TeachingTaxFlow, where you can get educated on different strategies, investment vehicles, tax breaks, and more direct from the experts. If you have a question you can't find the answer to, click here to sign up for TTF Urgent Care Express and get your answers directly from Chris!
Be sure to listen to the podcast "Episode #25: The Value of A Tax Extension" dropping this Thursday on this specific topic.
Follow the link below and subscribe to the show wherever you listen to podcasts to be alerted the minute it airs.
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