What Are The Benefits And Downfalls of Filing A Tax Extension?

If you are ever late to file your taxes in Alabama, you would be happy to know that you have the option to file an extension, which allows you some extra time to file your taxes. Many people do not know if they have this option and end up not filing at all, inviting more penalties from the IRS. An extension can give you about six months to file your taxes. 

It is always recommended to keep your finances organized so that you have everything you need during tax season. However, if you have not done that this year, you still have an option left. If your finances are too much to handle, you can consider hiring a Birmingham small business accountant to make the work easier for you. 

Pro: A tax extension is easy and automatic. 

Getting your hands on the form for a tax extension is easy and straightforward. Go online and download the Form 4868, which is the form for an extension to file individual income tax. Then, make sure to mail it to the IRS by April 15th. By doing this, you can get time until October 15 to file your return. 

Con: A tax extensive gives you more time to worry about taxes. 

Nobody likes to do taxes or even think about them. Some people prefer to get it over with within time and worry about next year again rather than lengthening their worry for six more months. If possible, do not procrastinate and put off the work. Do not take this extra time if you do not absolutely need it. 

Pro: A tax extension avoids failure-to-file penalties. 

The tax system is rigid and strict, but it is not heartless. To prevent you from incurring penalties and give you a chance to undo your errors, the government allows an extension. When you are getting the chance, it is highly recommended to take it, as the penalties can sometimes add up to 25% of your tax due. 

Con: A tax extension will not make the process easier. 

If you think getting more time is going to make the process easier, you may have another thing coming. After putting off the work for six more months, there is a good chance you might keep things for the last minute and rush again. The key to a stress-free tax return is being organized from day one. 

Pro: A tax extension gives you more time to seek a refund. 

Suppose you file your taxes on time and pay $100. Later, you find out that you could have filed for a return but overlooked it. However, it is too late to claim a refund now. This mistake can be avoided when you buy yourself some more time with an extension. 

If you are unsure about whether a tax extension is right for you, talk to a tax accountant today!