If you’re anything like me, Q1 FLEW by. I feel like those deadlines that were SO far away are hitting me in the face. Just like that, Q2 is here and those deadlines are PRESSING.
First, let’s get one thing straight. Today, I am talking about personal, C-corp, and single-member LLC tax returns. Certain tax returns including S-Corps and Partnerships were due March 15th. To learn more about extensions for those kinds of tax returns you can read the blog I wrote about it here.
Now back to the topic at hand. Extensions!
Have you filed your personal taxes? (or your C-Corp or single-member LLC tax returns). At this late point in the tax season, if you haven’t then you need to file an extension.
Why would I need to file an extension?
You don’t need an earth-shattering reason to file an extension, but you must file one if you don’t plan to meet the regular tax return deadline! Traditionally, federal tax returns are due on April 15, but the IRS will grant you an automatic extension to file your taxes as long as you complete form 4868.
Some common reasons to file an extension
- Incomplete tax documentation
If you’re worried about incomplete documentation or mistakes made on your return, take advantage of your extension to ensure your return is accurate. For example, if you’ve lost a form 1099. You are better off waiting for that form 1099 instead of skipping it and filing anyway. This will prevent you from filing an incorrect return thus exposing you to potential interest, penalties and taxes years down the line. You don’t want that smoke.
- Unexpected life events
We all know this one… Doesn’t matter if you intend to do something on time, sometimes life gets in the way. The IRS does not need an explanation to come down on you with hefty late-filing penalties. Go easy on yourself, there is no need to risk missing an IRS deadline. File an extension to give yourself 6 extra months to file. Panic attack averted.
- IRA Contributions
Extra time to file might be just what you need to obtain more tax savings. The IRS allows you to make 2021 contributions to your IRA. Tax deferred IRAs such as traditional IRA or SEP IRAs could result in reduced taxes, depending on your situation. Take the extra time to make the money-saving moves. Check out my recent blog to read more about these tax-saving retirement accounts.
- Late-payment penalties
This is a big one. Regardless of when you file your tax return, if you don’t pay the tax you owe, the IRS penalties can be severe. An easy way to avoid those penalties is to make a tax payment before filing. When you do, this payment serves as your extension application.
How can I file an extension?
Individual taxpayers complete form 4868. 48 The IRS offers Free File to certain individuals to electronically request an extension. Or just ask your tax professional to file the proper extension form for you.
You must file your extension request no later than the regular due date of your return. For this year, that due date happens to be April 18th instead of the usual April 15th that we are all accustomed to.
IMPORTANT: Filing an extension IS NOT a payment extension. It is an extension of time, not payment. An extension of time to file your return does not grant you any extension of time to pay your taxes. You should estimate and pay any owed taxes by your regular deadline to help avoid possible penalties. Payments can be made conveniently with the extension filing.
Don’t rush if you haven’t filed your tax returns. File for an extension and use the extra time to ensure you do your taxes CORRECTLY!
Disclaimer: This blog is for educational and conversational purposes only. Blog posts and social content from Obih Collective Inc. are not legal tax advice. Please consult a tax professional before making any tax decisions based on this information.