With the April 15 tax deadline coming up, many taxpayers are feeling increasingly stressed. Many wish they simply had more time to compile the necessary documents.
There is, however, helpful news; You can file for a tax extension. In fact, any taxpayer who fills out the IRS’s Form 4868 automatically receives a six month extension.
Simple! Yet, there are pitfalls. John J. Petosa, professor of accounting practice at Syracuse University’s Whitman School of Management, shares five tips that may be of use if you plan to file for a tax extension. Or if you want to avoid an audit.
- If you do not have all the necessary information or documentation to file your tax return “completely and accurately” by April 15, Petosa says you should file for an extension.
- Filing an extension does not extend that time to pay the taxes that are due. You are still required to pay the tax that is due, even if you file for an extension.
- Penalties and possible criminal actions resulting from a “failure to file” can be avoided if you file an extension. With the extra time provided to you by the extension, you can avoid filing inaccurately or belatedly, thus avoiding penalties and auditing.
- If you are currently under audit, filing for an extension might be a smart move. The IRS cannot include the current year in its audit if you file an extension.
- A tax extension is useful if you are waiting for a private letter ruling on a certain tax position. The response could be important to include in your tax return.
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