Tax Extension Center continues its series of The Top 100 Reasons to File a Tax Extension. Our aim is to inform taxpayers that a tax extension can be a valuable option because it saves time, stress, and even money.
Here’s reason #43: it’s inexpensive – especially compared to penalties and interest.
Here’s what happens if you do nothing by the tax deadline, not even file a tax extension – for every $1,000 on your tax balance you’ll be penalized about $50 per month until you file. On top on that, you’ll owe interest (about 4-6% per year) on that same balance.
Let’s say you owe the IRS $1,000 come April 15 and decide to do nothing for 3 months because you’re too busy. When you finally get around to getting your taxes filed in July, between the late filing penalty and the interest you’ll owe $1,162 – an extra $162. The longer you wait, the more you owe.
Now let’s say you owe $1,000 but you file a tax extension online for $20. In three months you’ll owe the IRS $150 less, or $1,012. Factor in the money you paid to have your tax extension submitted for you and you still saved $130.
So the big question for you: is $130 worth saving? If you consider a tax extension takes just a few minutes to file then I’m guessing you say ‘Yes’.
Reason #43 should really be: it saves you money!
Depending on when you read this, you may be able to save on the fee to file online. FileLater, for example, offers an early bird special where you can file a tax extension for FREE (that includes business tax extensions as well). That makes it even more of a no-brainer.
Maybe you are new to filing a tax extension. Or maybe you file one every single year. Either way, remember that a tax extension does not give you more time to pay what you owe the IRS. You still need to make your payment by midnight on April 15. An IRS extension gives you more time to file the necessary tax forms you’re supposed to file. Failing to make a payment could make you subject to tax extension penalties and interest.
Got any thoughts about tax extensions? Let’s chat in the comment section below.
