This is a financially difficult time for many Americans, and it's understandable that most taxpayers want to submit their tax returns as quickly as possible in order to receive their tax refund. But remember that patience is a virtue, and filing a tax extension can be useful in many situations.
Here are five reasons why a tax extension may be good for you, particularly in a weak economy.
A tax extension gives you more time to find every tax credit and tax deduction that you are eligible for. In these uncertain times, you want to hold onto as much of your income as you can. By obtaining an extension of time to file, you can ensure that you've filed the most advantageous tax return possible.
Even though any tax that you owe must still be paid by the original deadline (April for individual taxpayers or March for businesses), you may discover that the interest and penalties assessed by the IRS are lower than the interest you are paying on other debts. So if you really need that money for something besides handing it over to the IRS, a tax extension allows you that option (albeit for a fee).
Slow and steady wins the race. In the event of a favorable change in tax laws (which happens all the time), you could suddenly become eligible for lower interest rates or additional tax deductions. It really doesn’t hurt to request a tax extension and wait to file until the fall season ― and it could end up saving you more money.
In times of financial uncertainty, you may have more immediate problems to deal with than your Federal income tax return. Take some of the burden off your shoulders by filing for a tax extension.
If you are like many Americans and the economy has forced you to change jobs, sell investments, move, or tap into your retirement account, you could probably use more time to handle your (now) more complicated tax return. The same goes for business owners who have gone through considerable infrastructure changes or must report greater losses. Give yourself some breathing room and file for an income tax extension online using the IRS-approved FileLater system. It takes just a few minutes to submit, and it gives you five or six extra months to prepare your income tax return.