Resource Category: Frequent Tax Errors & How to Prevent Them

Think you know everything you need to know about income tax extensions? There are several common myths that taxpayers should be aware of when it comes to requesting an extension of time to file.

Here are five of the most common misconceptions about tax extensions:

1. The IRS doesn’t like it when people file for tax extensions, and they’ll probably turn me down if I don’t have a really good reason.
Wrong! The IRS automatically grants a 5- or 6-month extension to anyone who fills out the form correctly. They don’t even ask you why ― because it doesn’t matter to them. Many taxpayers (both individuals and businesses) routinely file for tax extensions every year just to ensure accurate, advantageous returns.

2. A tax extension will make me more likely to be audited.
Quite to the contrary. Statistically speaking, your chances of an audit may actually be lower when you file for a tax extension. Many people believe that IRS agents are required to audit a certain number or percentage of tax returns every year, but they typically fill their quotas well before the October extended filing deadline. (The IRS won’t tell anyone their audit secrets, though).

3. A tax extension sounds complicated, so I’ll need an accountant to handle it.
A tax extension can be requested quickly and securely on your own from the comfort of your personal computer. Filing an income tax extension is easy with the FileLater system, which helps you e-file your tax extension online in just minutes. At FileLater.com, we go beyond the tax jargon by electronically submitting the proper form for your Federal tax extension (IRS Form 4868 for individuals and IRS Form 7004 for businesses).

4. I’ll be stuck waiting until October to file my taxes, even if I’m ready in June or July.
Not true. You can actually file your income tax return anytime before the due date ― whenever you’re ready (although the IRS usually starts accepting returns in January). You can even submit your return before the original April filing deadline (March for businesses) if you have all your paperwork in order by then.

5. Nobody else does it.
On the contrary, more than 10 million taxpayers file for tax extensions every year! They are so common that even most State governments will automatically grant you a state tax extension if you have an approved Federal extension. A tax extension is a simple and straightforward way to give yourself more time to file the best possible tax return ― and it’s easy to do online with FileLater.

While deciding whether or not to file for an income tax extension, many taxpayers wonder if the IRS frowns on this sort of thing.

In fact, many tax professionals contend that filing an income tax extension actually makes you less likely to be audited by the IRS. This is believed because most IRS agents are busy filling their audit quotas in March, April, and May ― although the IRS won’t tell anyone their secret.

It is only natural to wonder. In most situations, you are penalized for lateness and past-due accounts via late fees and interest charges. Submitting a proper tax extension, however, means that you’ll have 6 extra months to file your personal tax return ― and you don’t have to worry about IRS filing penalties. But keep in mind, a tax extension only extends your deadline to file, and you must still pay any taxes owed for that year by the original due date of your return (April 15 for individuals and March 15 for businesses).

The IRS Doesn’t Care If You Request an Income Tax Extension

The IRS does not ask for a reason when you file for a tax extension. They will automatically grant a 5- or 6-month extension to anyone who fills out the application properly and submits it by the deadline.

Some people think that tax extensions are only for procrastinators who can’t pull themselves together in time ― but you’d be surprised by how many individuals and businesses routinely file for tax extensions each year. Besides, you never know when something might pop up that demands your time.

There are many reasons to request a tax extension, including the following:

• If someone else failed to provide the proper paperwork (such as a W-2 or 1099 tax form) that you need in order to file on time
• If you experienced certain life changes (such as marriage, divorce, or having a child) and you are now faced with a new set of tax requirements, tax credits, tax deductions, and tax forms to deal with
• If your accountant (CPA) becomes overwhelmed with other clients ― who are before you in line
• If you couldn’t find a good accountant or tax preparer at all
• If you tried using tax software, but it didn’t work out for you
• If you’re just a procrastinator

No matter what your particular motive is, remember that the IRS doesn’t care (and doesn’t ask) why you’re filing for a tax extension. As long as you fill-out the form correctly (Tax Form 4868 for individuals and Tax Form 7004 for businesses) the IRS will automatically grant your request.

File Your Tax Extension Online Now!

Now that you’ve decided to file for a tax extension, you can request it online in just minutes right here at FileLater.com. The FileLater system will automatically check your application for mistakes to help ensure a smooth submission. You will also be notified via confirmation email as soon as the IRS approves your tax extension request.

Our dedicated Support Team is standing by to help you. If your tax extension request is denied for any reason, FileLater will tell you why. You will also be able to make any corrections and re-submit your extension at no additional charge.

Don’t wait another moment! It’s easy to file an income tax extension with FileLater.

E-file your personal tax extension now.

E-file your business tax extension now.

In some situations, a tax extension is absolutely necessary. However, some people file for an extension every year even if they don’t actually need one. A personal tax extension will give you 6 more months to file your Federal income tax return ― although you must still pay any tax owed by the original due date (typically April 15).

You never know when an emergency (personal or financial) will pop up and force you to drop everything else. If this happens during tax season, you should file a tax extension. Are you having a difficult time finding all the receipts that you accumulated during the past year? Did you misplace your W-2 or 1099s? While you could rush to file your taxes with what you have, there is no good reason you should take that risk. Rushing through your tax return often leads to mistakes ― and those mistakes can be costly.

To request a tax extension, fill out IRS Tax Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return) and submit it to the IRS by the original deadline of your tax return (usually April 15). Keep in mind that you must also send the IRS payment for any taxes due.

Tax Extensions and Tax Audits: Is There a Connection?

When someone says the words “tax extension” to you, do you automatically think “tax audit?”

Maybe it’s time to think again. No one outside the IRS knows for sure how the audit selection system really works, but many CPAs have said that tax extensions actually decrease your chances of getting audited.

Why, you ask? Many financial advisors and accountants believe that IRS officers have an “audit quota” which begins around tax filing season. Some theorize that these quotas get filled well before the tax extension deadline in October (or September for certain business tax extensions). Thus, when the surge of tax season is over and the tax returns which have been approved for extensions are finally submitted, the IRS agents have less incentive to put those returns in their audit pile.

There is some discussion as to whether or not this is true, but filing a tax extension certainly won’t single you out for unfavorable treatment by the IRS. Approximately 10 million taxpayers filed a tax extension last year, including individuals as well as businesses.

Does the IRS Hate Tax Extensions?

It’s commonly believed that the IRS frowns on tax extensions and is less likely to treat extended returns in a favorable manner. If that were the case, however, why would they offer an automatic 6-month tax extension to anyone who files for it, with no questions asked? Additionally, by filing for a tax extension you are actually demonstrating compliance with IRS regulations. Think of all the people who just file late (or not at all) without even contacting the IRS.

It is also probable that, just like you and your accountant, the IRS agents wouldn’t mind having to process fewer tax returns during March and April. Both accountants and IRS agents can be easily overwhelmed during tax season, and the chances of human error (which may trigger a tax audit) is much greater. Therefore, there is no reason you shouldn’t give everyone a bit of a break and file for a tax extension this year.

It’s now easier than ever to file a Federal income tax extension online. With FileLater, you can complete the online tax extension process in minutes, and our automated system helps reduce human error when filling out the tax forms. You will be notified via email confirmation when your tax extension is approved by the IRS ― and if, for any reason, it’s rejected, you will be told why and allowed to re-submit it for free.

If you have any questions, our dedicated Support Team is here to help. File a tax extension online with FileLater today!

Tax Extension Mistakes to Avoid

When it comes to requesting a tax extension from the IRS, you don’t have to worry about much. They will grant your request, without questions, as long as you follow the proper procedure. Despite the fact that obtaining a tax extension is so simple, many taxpayers make mistakes every year.

Below are several tax extension mistakes that you can avoid:

1. Thinking that a tax extension gives you the right to pay later as well. With an extension you are being granted six more months to file your tax return. This does not mean that you also have more time to pay any tax you owe. You must still remit payment to the IRS by the original due date on your return (generally April 15th). If you do not send payment to the IRS, they will begin to charge you both penalties and interest.
2. Believing that you don’t have to do anything in order to get a tax extension. While the IRS is almost always guaranteed to grant you more time to file, they do require that you take some steps to begin the process and let them know. Most notably, you need to complete Tax Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return). On this form, you must provide information about yourself and submit it with payment for any taxes that you owe.
3. Filing for a tax extension when you are due a refund. Did you know that if you are owed a tax refund you don’t have to file for an extension? The IRS will automatically grant extensions to taxpayers who do not owe any taxes. Thus, filing Form 4868 would be a waste of time.
4. Assuming that you can get more than six months. Some people think that they can file for an initial six-month extension and then add extra time to their extension in the future ― this is very rarely the case. The IRS may grant two additional months in particular situations, but this is usually only done for taxpayers who are out of the country or on active duty military service. A six-month extension shifts your filing deadline to October 15th (of that same year), which should give you plenty of time to complete and file your return.

The tax extension process is relatively straight forward and easy to follow. That being said, many taxpayers have gotten confused and made the above errors. As long as you avoid these common mistakes, you should be able to receive a tax extension without any problems.

Common Tax Extension Pitfalls

The first and foremost consideration when filing for a tax extension is to understand that the extension allows for the later filing of the Federal Income Tax Return, it does not allow for late payment of the taxes due without interest or penalties which are incurred from the due date of April 15th.  The estimated taxes due must be calculated and paid when filing for the tax extension.

Remember though, that the penalties for filing late are much more than the penalties for paying late, so by all means, if you need to file for a tax extension to prepare your tax return, do so by the April 15th deadline and give yourself some breathing room and a chance to review all opportunities to reduce the amount of taxes due either by qualifying tax deductions or tax credits.

One disadvantage to filing for a tax extension is that once April 15th passes, you are no longer able to file your Federal Income Tax Return electronically.  It must be completed and sent through the U. S. Postal Service or some other ground service means.

The IRS will notify you when they receive your Federal Income Tax Return, however, they don’t always notify you when you file your Tax Extension Form 4868.  ALWAYS make a copy of any tax documentation you prepare and send.

Filing for that tax extension also relieves any angst and stress related to rushing to collect documents, finding an auditor or tax professional available to assist with your tax preparation, or actually preparing the tax forms yourself.  However, the downside is that you still have to make time to gather up and prepare for filing your Federal Income Tax Return by the October 15th deadline.  Don’t put it aside and figure you’ll cross that bridge in the future ― else you’ll be in the same boat you were when you opted to file for the tax extension ― rushing to meet the filing deadline!

Remember too, that contributions to qualifying retirement plans, that can be itemized and deducted from your adjusted gross income (AGI), have to be made before the April 15th deadline in order to qualify for the preceding tax year. This holds true whether or not you file for a tax extension.

Additionally, as you’re preparing to apply for a tax extension, estimate the amount of taxes you owe that year, and if in doubt, pay a little more than you think you owe.  Pay the estimated taxes due when you file for the tax extension.  If you overpay, you will receive a tax refund.  Interest is charged from April 15th on any unpaid taxes due the Internal Revenue Service and they will collect!