What is Tax Extension Update 2020?
The last date for filing taxes is still April 15, 2021, and considering the circumstances, there are chances that this date could be extended. However, you need to file a tax return before the due date.
There are a lot of benefits to getting a tax extension. It is easy to qualify for a tax extension, and whether you are the business owner or not, taxpayers are routinely filing for them every year. There are many reasons why a taxpayer is filing for taxes. Some of them are listed below.
- You might want additional time to make that all your financial record is accurate. Sometimes there are changes in business or work, so you need extra time.
- Who does not want more time to file their taxes? There is no need to hurry in filing taxes. Rather, take time to make sure your tax return is accurate and that you are getting every deduction you\’re entitled to. Many taxpayers file personal and/or business tax extensions every year, this gives them extra time.
- You can save the amount in tax deductions. The US tax code is in a constant state of flux. If you have the extension, then you can benefit from these changes.
- It can decrease the chances of an audit. People think that whoever files for an extension is more likely to get audited, but in reality, this is not the case. IRS brokers have an audit quota to meet, but they generally meet it well prior to the October 15 tax extension deadline.
- The IRS does not care why you are interested in having an extension, provided that you correctly complete IRS Form 4868 (for personal income taxes) extension. So take your time with your taxes this year. You might come out ahead!
- If you are looking to file your taxes soon the first day to file taxes is between Jan15 and Feb1, 2021. You can file the e-tax or electronic return.
Advantages:
There are many advantages that come with filing extensions. Some of them are as follows.
1. More time
Tax extensions do really give you extra time – 6 months – to be precise. Many people decide to file an extension since they know they will not be able to correctly prepare their return before the deadline. In this example, filing for an extension is well worthwhile, because there are certainly tax mistakes that can be expensive when made. It is always much better to file an extension than an incorrect return.
2. Can help prevent an audit
Although many people presume, any small mistake will result in an audit, with tax extensions it\’s not the situation. Filing a tax extension will not increase your odds of being randomly chosen for a scheduled appointment.
3. No punishment
You will not be fined, cited, or penalized for filing a tax extension. The IRS does not penalize you if you file for a tax extension they will be more inclined to get their cash with less paperwork to worry about.
4. Stress relief
In this market, there’s Lots of stress and worry to go around. Since there is no penalty for filing an extension, you might file one just to take some anxiety off of your shoulders. These days we could take all the stress relief we could get, and if you believe filing an extension helps you focus on bigger problems, use that advantage.
5. No rushing to get your return in
The worst thing you can do is dash your return. By rushing your return, you may either fudge the numbers or overlook claiming deductions or credits you were eligible to claim. Consequently, if it is nearing the deadline, and you also know you do not have time to do it right, file an extension.
Disadvantages:
1. You still need to pay
Although filing an extension will provide you more time to file your return, it does not give you more time to pay the IRS if you owe them money. It is a costly but frequent misconception which filing an extension allows you to postpone tax payments as well.
If you owe money to the IRS, then make sure you send in payment when you file your extension. You must pay 90 percent of the amount you owe in taxes by April 15 or become subject to a late payment fee. Notwithstanding that payment, you will be subject to interest on whatever is owed if not paid by April 15.
2. IRS does not always notify you
IRS does not always inform you that they receive your extension. If you do file one, then it\’s a good idea to telephone the IRS and verify they received it. Additionally, for your advantage always make and keep a replica of any tax documents you send out.
3. Delaying the inevitable
Hey, you might be getting some stress relief from April, but, you had better find some time to get ready. When filing for an extension and it ends up costing them thousands of dollars in interest and penalties. Remember that no matter the reason you file If you do not know just how much to pay; look to the past year\’s return for some guidance.
4. Texas State Deadline
Every state has its own tax system; the state of Texas does not collect any income tax, so you do not need to file state income tax. However, you need to pay federal taxes.
Pay us a visit at SG Inc CPA for Tax Preparation Services information or help.