Do You Need an Income Tax Extension for the 2014 Tax Year?
- December 29th, 2014
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Having trouble completing your tax return? An income tax extension gives you extra time to make sure you are filing correctly and getting the most out of your year. There are some things you should know about filing an income tax extension. Like everything, there are pros and cons to filing an income tax extension. Here is what you need to know.
What Does an Income Tax Extension Do For Me?
If you are having a crazy year and didn’t get enough time to prepare your taxes you have the option to file for an income tax extension, which will push your tax deadline for 6 months. Your deadline for the 2014 tax year is pushed from April 15, 2015 to October 15, 2015. This will help you avoid penalties with the IRS for filing late. Although the income tax extension gives you more time to file your tax return paperwork, it is not an extension to pay the money you owe for taxes. If you owe money for taxes you have to estimate the amount and make your payment by April 15, 2015.
Advantages of Filing an Income Tax Extension
Filing an income tax extension gives you a lot more time to file the paperwork for your tax return. If you work a seasonal job like a teacher, you may have more time in the summer to take care of your tax preparation. Don’t let your swamped schedule and April 15th deadline whack you on your taxes. If you paid your taxes and estimated your return postponing filing your taxes, with an income tax extension, can help you get the biggest return possible and avoid errors you would make rushing to file.
Another advantage to filing an income tax extension is that it gives your accountant some extra time. January to April is tax season. Your accountant is up to their eyeballs in filings. Some of you may notice that with other tax providers, the rush to help their clients meet the deadline leads to errors and missed out money. Filing for an income tax extension can give your accountant the extra time that they need to give you a more thorough filing.
Filing for an income tax extension does not take that long. Just download this form from the IRS (Form 4868) to file your income tax extension.
Disadvantages of Filing an Income Tax Extension
Although an income tax extension will give you more time to prepare your paperwork for your tax return, there are a few things that you should be aware of when filing. The biggest problem people have is not knowing how much they owe on April 15th without filing a tax return. If you don’t pay or miscalculate the amount you’ll be subject to late payment fees and penalties. The late payment fee is 5% of the unpaid taxes for each month or partial month that the tax remains unpaid. The penalty begins to accumulate interest April 16th, the day after tax filing due date. For those really far behind, the penalty is capped at 25% of your unpaid taxes.
Another downside to filing an income tax extension is that you will have to wait longer for your tax return. You can’t claim your refund until you file your taxes. If you don’t file until September or October you will likely not see your refund until fall.
Although you are given an extension to file your paperwork, an income tax extension doesn’t help you out if you’re a procrastinator. Working on your filing in the summer is no easier in the summer than it is in April. If you are filing for an income tax extension because you don’t want to make time for it you should reconsider. Use an income tax extension if you need it.
If you need help with your tax return, or advise on filing an income tax extension call the tax professionals at JRH & Associates at (516) 794-5752!