Tax Extension Center continues its daily series dedicated to The Top 100 Reasons to File a Tax Extension. Our aim is to inform taxpayers that a tax extension can be a valuable tax season option because it saves time, stress, and even money.
Here’s reason #63: you sold some stocks or similar investments and things are more complicated for you tax-wise.
The good news is you made some extra cash last year by selling that hot tech stock that shot through the roof. The bad news is you have to pay capital gains tax and you’re not really sure what that means in terms of filing your taxes.
The typical American taxpayer’s picture doesn’t change much from year-to-year. They keep the same job, live in the same house, and have the same number of dependents. That stability makes it easier for someone to do their taxes on their own if they want to.
For those that do their own taxes, a new variable like capital gains tax can be confusing enough (or even intimidating for some) that the extra time a tax extension provides is very valuable. That time could be used to research exactly how to correctly account for that extra income or even talk to a tax professional for advice (always a good idea).
No matter the reason why you need more time to file your taxes, the IRS doesn’t care. A tax extension is automatic. So take that extra few weeks or months to figure out how that nice margin you made on that stock fits in with the rest of your tax picture and find another great stock for this year.
Are you considering filing a tax extension for the first time? Or maybe you file one every single year like clockwork. 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 (or March 15 for the corporate tax deadline). An IRS extension gives you more time to file the necessary tax forms you’re supposed to file. Failing to make your payment on time could make you subject to tax extension penalties and interest.
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