What to Do After You File for a Tax Extension
There are times when requesting an extension to file your taxes is unavoidable. Taking this step is certainly better than letting the filing deadline pass with indifference. Getting a little extra time to prepare your return may ultimately be your best short-term solution, so long as you use the time wisely.
Once your extension has been obtained, it’s important to remain proactive in handling your taxes. Procrastinating will only lead to unnecessary stress and, if you’re not careful, may result in missing your extended deadline. Falling too far behind on your return can cost you money and put you directly on the IRS’ radar.
The New Timeframe
One of the best things about getting an extension to file your taxes is the length of time you’re afforded. The extended deadline this year is October 17th, meaning you have an extra six months to get your return squared away. Put another way, you have two months more than the entire length of the official tax season. Unfortunately, this liberty can lead you to stalling until, say, the summer months when you think you’ll have more free time. This strategy is ill-advised for a number of reasons, including how much you’re eventually going to pay for that tax bill.
Slow and Steady is the Clock
A common misconception about filing extensions is that they afford you more time to pay your taxes. Although you have until October 17th to submit your return without a failure-to-file penalty, the clock starts on payment penalties and interest following the original filing deadline. This means that if you will owe once your return is completed, your actual total will need to be adjusted to include the additional monthly charges.
How to Spend Your Time
There are a number of reasons why you might have requested a filing extension. You may be waiting for income information from an employer, or perhaps you’re disputing an error from a 1099 (this frequently happens in cases where your creditor claims that a debt was reduced or written off but wasn’t). Whatever your intentions, you’ll want to address each specific task one at a time. Since you have an additional six months, you can ensure that each income detail is accurate. Also, you can take a moment to review deductions you’re taking (or consider taking them if you haven’t looked at your options). In all likelihood your to-do list can be completed quickly, and should be handled with a sense of urgency.
Deadline Lapses and Complications
While missing the original filing deadline means interest and penalties for any balance you owe, failing to meet the extended due date can create even more cost. In the event that October 17th comes and goes without your return being filed, you’re subject to a failure-to-file penalty. Additionally, the IRS can take action if you don’t. This may include filing your return for you without including credits and deductions, resulting in an exaggerated and delinquent balance. If negligence persists, you may face collection action. Your best course of action is to avoid these types of complications by tackling your tax return well ahead of the extended deadline and, if necessary, enlisting a tax professional like Optima Tax Relief to help you get it done.
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