Many are concerned that filing an extension can cause a red flag or increase chances of an audit. That is simply not true. Extensions are used all of the time by families, individuals and businesses.
If the gathering of your paperwork is rushed or if you really haven’t spent enough time on your business record keeping, you should probably file for an extension. If not, you are likely to miss something. Missed documents could cause you to lose deductions you are entitled to or even miss income statements that the IRS will receive a copy of. A missed income statement automatically generates a mismatch letter from the IRS which will result in additional taxes, penalties and interest. Missed deductions can be captured later in an amended return but at additional cost.
If you procrastinate and file late, without filing the extension, you will be assessed penalties. For pass thru entities, the penalties can run to hundreds of dollars for each shareholder or partner.
If you are part of a pass-through entity, such as an S corporation or a partnership, your business tax return is due by March 15th. The early deadline allows enough time for you to receive what you need from the business (the K-1) to file your personal return. If the business return is going to be late, you should be sure to file an extension for your personal return as well as your business return to avoid penalties for late filing.
The extension is easily filed and is only one page. With e-filing, you get notification that the extension was received. A payment does not need to accompany the extension. We prepare and file extensions at no charge for our clients upon request. For those who are not currently our clients, we charge $10 which is refundable when we prepare your return.
Need an extension? Don’t sweat it. Call or email us at info@afsnodebt.com and we will send you a form to fill out with info we need to file your extension and provide instructions for a credit card payment.
Really, filing an extension is not an issue. Use them if you need them.
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