Should you File Taxes Now or File an Extension?

It's tax season again and you're facing the same question you face every year: should you file your taxes now or file an extension? A common misunderstanding about tax return extensions is that it will give you longer to pay what you owe - this is not true; filing an extension simply gives you more time to file, not more time to pay. You still need to estimate your taxes and pay them when you file your Form 4868; not paying or paying late will cost you in penalties and fees.

The most common reasons individuals and businesses file a Form 4868 is:

  1. They're out of town during tax season
  2. They don't have the money to pay their taxes
  3. They need the additional time for all their forms to come in - like Form 1099 or Form K-1
  4. They want to be thorough - to make sure they're getting all the deductions they can.

In the process, they hope the extension will relieve some of the stress associated with tax time. But let's face it- tax preparation is stressful and time-consuming. But it doesn't have to be. Whether or not you should turn to a tax professional is perhaps a better question to ask yourself. Using an expert will not only alleviate your stress, they can better address your question regarding filing or not filing an extension. Other advantages include:

  • You won't have to read through this year's tax revisions, attempting to figure out which changes pertain to you.
  • Or - more likely - you won't have to blindly trust in tax software to find all your deductions and credits.
  • Or - you won't be so overwhelmed by your 1098's and 1099-R's, and 1099-B's, and W2's that you will actually file your taxes on time, saving yourself penalties and late fees.
  • If you're a busy small business entrepreneur time is your nemesis. You simply don't have the time to wade through your taxes. 

Many people who do their own taxes don't choose the best filing status and end up paying more taxes than they need to. Most people don't understand the deductions and credits they're entitled to. Some of the people who don't file their taxes are losing out on refunds that they don't realize they're owed. And sadly, although the IRS can audit your returns for up to seven years (and beyond, if they believe you've egregiously avoided paying taxes), you the taxpayer can only amend a return back three years to get those refunds. When a professional prepares your taxes, he knows how to get you all the deductions and credits you deserve. He will choose the best filing status for you, and know which forms you have to file. Perhaps more importantly, a tax professional will guide you during the whole year, not just at tax time - helping you understand which receipts you should save for your books, what kinds of investments will actually save you money on your taxes now, and benefit you later at retirement, and advise you on expenditures you've made during the year which are tax-deductible.

The tax professionals at Foster Financial, CPA understand taxes and will take the burden out of preparing yours. Contact us today to file your taxes and save time and money, and precious peace of mind.