Tax Extensions in 2017
- Author Lauri Pitcher
- Published October 3, 2017
- Word count 571
It’s important to file your taxes on time, but sometimes there isn’t enough time to get your financial records in order. In this case, the IRS allows for a six-month extension period to file your taxes, given that you complete and submit Form 4868 (for individuals) or Form 7004 (for businesses) before the April 15 deadline of each year. There’s no penalty for acquiring a tax extension! However, proving to be lackadaisical will do more harm than good. Here’s what you need to know about tax extensions, and why it’s important if you haven’t already to file your taxes before October hits.
Filing a Tax Extension is a Good Thing
An obvious benefit to requesting a tax extension is you now have an extra six months to prepare your tax documents and get them ready to report them to the IRS. It’s best to request an extension on your filing period than to file late without one. While this remains true, it’s pertinent that you understand the benefits of a tax extension.
By requesting a tax extension and filing your taxes prior to October 16, 2017 you will avoid the late filing penalty. The IRS late filing penalty is equal to 5% per month for any outstanding tax payments. Paying on time will help you avoid a deferral on your taxes once the deadline hits.
A tax extension allows you to improve the accuracy of your tax return, and get all the deduction and tax credits you’re eligible for. You’ll be able to go in-depth and make important decisions on your tax return, such as utilizing carrybacks and carryforwards for business losses, or reporting depreciate equipment versus taking a Section 179 deduction. Furthermore, with this extra time you can go in-depth with your accountant and make sure everything is complete and you aren’t missing anything before submitting to the IRS.
There are even more benefits for filing a tax extension. With one, you have extra time to fund a retirement plan, whether it’s a 401(k), SEP-IRA, or SIMPLE-IRA for self-employed persons only. You’re even given the chance to recharacterize your IRA from a traditional one to a Roth IRA contribution, or vice versa, depending on your eligibility for one IRA or the other.
What Not to Forget About Your Tax Extension
Filing for a tax extension isn’t the same as filing for extra time to pay outstanding taxes. The IRS still expects you to pay your income tax in full by April 15 each year. While a tax extension can limit the amount of penalties that come up, there remains a monthly half percent late payment penalty on any outstanding balance.
In addition, tax extensions don’t allot further funding of an IRA. Any contributions must be in by the initial tax deadline annually. An extra item to consider for married couples is the status of your tax returns. If you wish to switch from a joint tax return to separate ones, you must amend your tax returns by April 15. As an added bonus, a tax extension doesn’t give you extra time for mark-to-market elections for professional traders. These may be important to you, and if you were thinking of doing one these during your tax extension, you’re out of luck. Fortunately, you’ll be ready to prepare these items in time for the upcoming tax season at the beginning of next year.
If you’re one of many who decide every year to put off filing their tax returns, don’t this year! We at Lucia CPA in Riverside, CA are here season after season ready to help you with your tax needs. Start today by contacting us either online or by phone at (800) 636-0438. We aren’t your ordinary bean counters!Article source: https://articlebiz.com
There are no posted comments.
- How to Close a Limited Company in the UK
- Maximizing Your Finances: Unleashing the Power of CPA Services
- VAT penalties – New rules
- TAX-FREE STRATEGIES IN AN UNCERTAIN ECONOMY
- 2022 Energy crisis and failure to connect Reality.
- When Are Corporate and Personal Taxes Due in Canada in 2021?
- You Would Never Have Thought That Having Accounting Internship Could Be So Beneficial
- ACTIVATION OF UAN
- Focal motivations behind getting a Tax direct for Small Business Firms
- Avoiding the flood — tax issues with water rights in agribusiness
- Social security benefits for a family (COVID-19)
- How to use QuickBooks Component Repair Tool?
- Do you want to reduce your taxes for next year?
- Will you be responsible with your tax refund?
- Getting started with QuickBooks Enhanced Payroll in Brief
- Are DSTs Right For Your 1031 Exchange
- Tax Return Makeovers By Kenya Woodard
- Why have all crypto tax attempts failed?
- Are You a Corporation? Know Why Consulting a Tax Accountant Is Vital
- Share capital or share premium for your Dutch company?
- Everything investors should know about 1031 sponsors
- Why is the income tax so high in UK?
- Should I do my own tax return?
- Get More Money Back on Your Tax Return with help from the Tax Cuts and Jobs Act
- Don’t Fall Victim to these 3 Tax Scams in 2018
- Find Out If 72(T) Penalty Free Income Is a Solution for You
- 20 Things You Should Know About The New Tax Laws
- 4 Key Reasons Why Payroll Is Necessary Within A Business
- Accounting for doctors and GP's: Basic advice & guidance
- What is Cryptocurrency and Do I Have to Claim it on My Taxes?