As Tax Day approaches, taxpayers will often rush to complete their returns by the April 15th deadline. While it’s ideal to file your return by the IRS due date, there are many instances that can prevent this. In these circumstances, it can be beneficial to extend your return.

Consider, for example, K-1s from pass through entities are not received until well after the deadline or right before it. In this scenario, filing an extension is a good strategy.

Scrambling to file by the deadline, increases the risk of missing out on key planning and strategy opportunities. Extending your return allows for the appropriate amount of time to plan for and prepare your return. It can also help improve the accuracy of your return, by allowing extra time to dot the I’s and cross the t’s thus ensuring the submission of an accurate return.

It is important to note that extra time to file is not extra time to pay. Extending your return does not require that you have all the information to complete your return. Instead, you need enough key information to estimate your tax liability. Any payments due to the IRS are still due regardless of whether you extend.

Taxpayers are often concerned that an extension will increase their risk of an IRS audit. While there isn’t a direct correlation between extensions and audits, there is an increased risk of being audited if the taxpayer rushes to file a return by the deadline only to have to file an amended return at a later date.

Amended returns are more likely to be scrutinized, so file once accurately if possible. Filing a return without complete information can result in needing to amend your return, which always incur additional fees.

Filing an extension is a good strategy if you need more time to:

• consider proper reporting,
• get professional advice,
• file an accurate return.

It’s our goal to help clients make the right decision around extending versus filing. If you have questions about which is best for you, please contact us.

Sandusky
419-625-4942

Norwalk
419-668-2552