Pros and Cons of Filing For a Tax Extension

To extend or not extend? That certainly is the question for taxpayers who are realizing tax day is right around the corner. While filing for a tax extension gives you 6 more months to gather and organize your documents and deductions, for some tax extensions are avoided like the plague. Is it bad to extend?

Which is worse, rushing to file your taxes with possibly inaccurate documents or filing for a tax extension?

The Real Question

Going out on a limb, I venture to reword their question: “Am I more likely to get audited if I file for an extension on my taxes?” While only the IRS would know whether a tax extension truly increases your audit selection probability, there really seems to be no evidence to support this paranoia. Many tax professionals believe that if the alternative were to file a rushed, disorderly return, then filing an extension would decrease the likelihood of generating a tax audit.

Be warned! While an extension gives you 6 more months to file a tax return before late filing penalties start accruing, full payment of taxes is still due by tax day. Failure to pay taxes on time may result in both underpayment penalties and interest on overdue taxes.

If you’re not sure whether to expect a tax refund or if you should pay a little more to play it safe, get with an expert tax professional who can quickly provide you with both an estimate and prepare a payment voucher if necessary. OTA Tax Pros offers this extension service at no extra charge to students of Online Trading Academy.

At the end of the day, filing for a tax extension can be both strategic and a stress relief. Not to mention, your tax preparer wouldn’t mind a little less rush during tax season.

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