lunes, 17 de abril de 2017

What is a Tax Extension?

An extension is your way of asking the Internal Revenue Service for additional time to file your tax return. A Tax Extension is a prorogation to file the return, not an extension to pay the taxes due. The Internal Revenue Service allows taxpayers to file for a six-month extension if they need more time to prepare their tax return. You can obtain a tax extension for any reason; the IRS grants them automatically as long as you complete the proper form on time. 

At GUARDIAN INSURANCE AGENCY located in Fairburn, Lagrange and Norcross, we give you a few important things you should know about tax extensions before relying on one to postpone your filing obligations:

1. What do you need to do to get a tax extension?:

If you think that you may need an extension to file or could have difficulty paying the amount owed in April, it's best to act early, seek the advice of a professional or contact the IRS.

Once you have decided that you want to request a tax extension, you will need to choose a method for requesting an extension.

There are 3 ways you can get a tax extension:

- Electronically file (e-file) Tax Form 4868 online
- File a paper Tax Form 4868 by mail
- Pay all or part of your income tax due (what you expect to owe) with your credit card or debit card using the Electronic Federal Tax Payment System (EFTPS)

2. What are the benefits of filing an extension?:

- Six extra months to finish up your tax return: Having extra time to finish your return is often necessary, especially if you are still waiting for tax documents to arrive in the mail or you need additional time to organize your tax deductions. 

- Helps reduce late penalties: There are two basic penalties the IRS typically imposes: a late filing penalty of 5% per month on any tax due plus a late payment penalty of half a percent per month. If you file an extension and then file by the extended deadline of October 16th, you'll avoid the 5% per month late filing penalty. If you file after October 16th, the late filing penalty will begin from October 16th, which creates a deferral on this penalty.

- Can preserve your tax refunds if you file after the extended deadline: With an extension, the refund statute of limitations is also extended by six months, which can preserve the ability of taxpayers to receive their federal tax refund even if they get behind in submitting their tax return.

3. Why not to file an extension?:

- Many people file for an extension because they owe taxes and are unable to pay them, but an extra time to file doesn't mean extra time to pay. An extension will give you extra time to file your return, but any tax is still due by the original deadline.

- Some people aren't eligible for extensions. Taxpayers who were approved for an offer in compromise must file by the April deadline during their five-year probationary period. If you don't file by the April deadline, the IRS can revoke your offer-in-compromise and re-instate the original amount you owed.

- An extension won't give you extra time to fund an IRA. Contributions to a Traditional IRA and/or Roth IRA are due by the original April deadline.

The 2017 tax season is next to finish and aGUARDIAN INSURANCE AGENCY located in Fairburn, Lagrange and Norcross we help you with all about the Tax Filing Season.

For more Information contact us: (706)884-5006 or (770)969-5666

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