Every year we address client concerns about extending their tax returns. Over the years I’ve seen the media hype over the April 15 deadline like it is the final deadline and failure to file will cause problems. That is simply not true. I have counseled clients that it really is ok to file for an extension. Yes, there are some things to know, but extensions have benefits as well. We encourage extensions because it reduces stress for our clients and allows for the preparation of returns in a more relaxed, less deadline-driven environment which only has positive benefits for our clients.
As you know, the initial deadline to file your taxes is April 15th every year (March 15th for corporations and partnerships), unless that day falls on a weekend or holiday. For many, this causes panic especially for clients who are waiting on brokerage statements or K-1s from investments. But why? The April 15 date should not cause panic at all. The IRS grants an automatic extension until October 15. You don’t need a reason; you or your tax professional just need to file a one-page form requesting the automatic extension on or before April 15.
You should make a payment if you think you will owe to avoid late interest penalties and interest. But it is not necessary if you are ok paying a relatively small amount of penalties. Other than that, it is very simple and relieves stress.
Remember, the tax industry is notorious for tax professionals working 80-100 hour weeks. Do you really want your tax pro working on your return in a situation like that? I personally have extended my tax return for the last 20-plus years. Why? Because I can, and it helps me work on it when there is less stress. I think clients should do the same.
Here are some things I have heard over the years.
I Need A Good Reason to File For An Extension
Wrong. The IRS does not require a reason. In fact, there is nowhere on the form that allows you to plead your case, because you don’t have to and the IRS does not want to hear your reasons.
An Extension Increases My Chances of Being Audited by the IRS
I don’t know where this came from but it is simply is not true. There is no data supporting this fear. In fact, some have theorized that extending actually decreases audit risk because of the timing the IRS uses to select taxpayers for audit.
The Extension Process is Complicated
It is actually one of the easiest things we do. A click of the button and it is done. We get acceptances within a day, usually within an hour.
If I Extend, I Won’t File Until October.
The extended deadline to file is October 15th, but that doesn’t mean you can’t file April 16th or any time in between. We sometimes file extensions to give our client a day or two to sign their e-file forms. Or clients need it because they are waiting on a K-1 or some other information. The best reason is that it allows us to do a better job in a less stressful environment without the pressure of deadlines and hundreds of other clients.
Nobody else files extensions, I will be singled out.
To the contrary, millions of people file extensions for their business and personal returns. A reported 10 million individuals filed extensions last year. Personally, I have been extending my own business and personal returns for at least 20 years.
If you need to file for an extension, please contact us and let us help you walk through the process. It really is painless, and you will relieve unnecessary stress from your life.
