You have to submit your tax forms by April 15. Or do you?
It depends on whether you ask for an extension. April 15 is the usual tax filing deadline, and it will apply to you if you don’t ask the government for more time. People who request tax filing extensions get their deadline pushed back to October 15, which allows them an extra six months to finish filling out their forms. More time to file can be helpful, but there are also downsides to getting an extension. Here are some of the pros and cons.
Pro: You Won’t Be Fined for Filing Late
Not filing your taxes on time results in a penalty equal to 5 percent of your tax bill multiplied by the number of months you’re overdue, up to 25 percent of your bill, as USA TODAY notes. If you think you won’t be able to make the April 15 deadline, you should ask for an extension so you can file late without incurring the fine.
Pro: You Have More Time to Check for Errors
Suppose you expect to be able to file by April 15 but you’re very busy with other things going on in your life. Maybe you’re moving to a different city or starting a new job in the middle of April. You probably won’t be able to give your taxes your full attention before the deadline, and you might make mistakes or forget to claim some deductions. An extension will benefit you by affording additional time to check your work and to make sure the information you turn in is correct.
Con: You Have to Estimate What You Owe
Tax filing extensions give people extra time to file, but payments are still due April 15. If you are filing later, you have to estimate what you need to pay, which can be tricky if you haven’t started on your tax paperwork. And if you don’t pay at least 90 percent of your tax bill by April 15, the IRS will charge you penalties, as stated by USA TODAY.
Con: Your Refund Will Be Delayed
You can’t get a tax refund until you file your taxes; when you get an extension, the government holds onto your refund until you file. Thus, every day after April 15 that you haven’t yet filed is another day that your refund isn’t available for you to spend and isn’t in your bank account earning interest.
Asking for an extension is appropriate if you will not be able to complete your tax forms by April 15 or if you have a good reason to choose to work on them past that date. If your only reason for postponing is that you hate doing taxes, the cons of the extension probably outweigh the pros. In that case, you’d be better off getting this chore out of the way by the standard deadline.
Image source: Flickr
Consumer Education Services, Inc. (CESI) is a non-profit service provider of comprehensive personal financial education and solutions for all life stages and for all of life’s milestones. Our goal is enhanced economic security for everyone we serve.
CESI is NOT A LOAN COMPANY