{"id":192032,"date":"2018-03-21T15:39:02","date_gmt":"2018-03-21T22:39:02","guid":{"rendered":"https:\/\/www.nationalfunding.com\/blog\/?p=192032"},"modified":"2020-04-17T08:54:05","modified_gmt":"2020-04-17T15:54:05","slug":"tax-return-deadline-pros-cons-filing-extension","status":"publish","type":"post","link":"https:\/\/www.nationalfunding.com\/blog\/tax-return-deadline-pros-cons-filing-extension\/","title":{"rendered":"Out of Time for the Tax Return Deadline? The Pros and Cons of Filing an Extension"},"content":{"rendered":"

So, your business tax paperwork is still sitting in the to-do pile. You knew tax season was looming, but then you blinked, and suddenly the April tax deadline for sole proprietors and single-member LLCs is right around the corner. Whoops. While you can scramble to get ready before the deadline, another option is to file a tax extension with the IRS. It’s free, can be done online<\/a> and means you won’t have to submit your return until Oct. 15. If only your teachers made it so easy to push back homework.<\/p>\n

But, like most things in life, there are some considerations to keep in mind. Let’s take a look at the pros and cons.<\/p>\n

Pros: Buy Some Breathing Room<\/h2>\n

More Prep Time<\/strong><\/p>\n

When you file a tax extension, you get six more months to prepare your return. This way, you can take your time and make sure everything’s accurate \u2014 and most importantly, find every deduction<\/a> that could save you money this year.<\/p>\n

Not only is this less stressful, but chances are you’ll avoid mistakes that could force you to refile. After all this, do you really want to start over with an amended return? If you don’t have time to prepare properly, take the extension.<\/p>\n

Avoid IRS Penalties<\/strong><\/p>\n

One of the worst IRS fees is the dreaded failure-to-file penalty<\/a>. If you owe the IRS money and haven’t filed your return by the April tax deadline, they’ll charge an extra 5 percent per month on the unpaid amount, up to a maximum of 25 percent. If you owe $10,000, that’s $500 per month until you’ve filed your return, up to $2,500 max. Ouch!<\/p>\n

But if you file for an extension, you have until Oct. 15 before this penalty kicks in. That way, you can prepare without the IRS breathing down your neck.<\/p>\n

Extra Attention from Tax Planners<\/strong><\/p>\n

If you think you’re stressed about tax season, consider how your accountant feels. It’s absolute chaos this time of year as they get all their clients ready to file. They’ll be in a rush to finish your return, and some planners charge extra for returns prepared close to the deadline.<\/p>\n

On the other hand, your accountant’s office is probably a ghost town during the summer. By extending, you can meet your tax planner during the quiet season, when they’ll be thrilled to have some business.<\/p>\n

\"Filing

Filing an extension gives you more time to prepare your return, but your taxes are still due.<\/p><\/div>\n

Cons: Extending Isn’t a Free Lunch<\/h2>\n

The IRS Still Wants Its Money<\/strong><\/p>\n

Filing an extension only delays the deadline for your tax return; your taxes are still due April 17, 2018. If you haven’t paid everything by then, the IRS will charge a 0.5 percent per month failure-to-pay penalty<\/a> on the unpaid amount, up to a maximum of 25 percent. It’s a lot better than the failure-to-file penalty, but can still add up.<\/p>\n

This puts you in a bind, seeing as you won’t know how much you owe until you’ve calculated your return. You can mail in a check with your best guess, but if you underpay, you’ll be charged the penalty; and if you overpay, you won’t get the overpayment back until after you file. The only way to know for sure is by preparing your return.<\/p>\n

Delay on Tax Refunds<\/strong><\/p>\n

If you’re expecting a refund to come your way, know that you won’t get that money until you’ve filed your return. The IRS won’t start handing out checks until they go over the numbers themselves. The sooner you file, the sooner you’ll get your refund.<\/p>\n

Remember, just because you take an extension, you don’t have to wait until October to file. You can send in your return whenever you’re ready, and the IRS will get moving once they have your paperwork.<\/p>\n

Knowing you have the option to extend can take some of the stress out of tax planning \u2014 and hopefully ensure you won’t be pulling an all-nighter on April 16. Contact a tax professional to determine if extending is the right call for you.<\/p>\n","protected":false},"excerpt":{"rendered":"

April tax deadline breathing down your neck? If you file a tax extension, you’ll have six more months to prepare. Here are the pros and cons.<\/p>\n","protected":false},"author":10,"featured_media":192030,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[65,104,115],"class_list":["post-192032","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-taxes-regulations","tag-tax-advice","tag-tax-deadlines-for-small-business","tag-tax-deductions-for-small-business"],"yoast_head":"\nShould You File a Tax Extension? The Pros and Cons<\/title>\n<meta name=\"description\" content=\"April tax deadline breathing down your neck? If you file a tax extension, you'll have six more months to prepare. 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