Advantages and Disadvantages of Applying for a Tax Extension

Important reminder: Tax Day 2017 is Tuesday, April 18th. This is the last day individuals can submit their tax returns to the IRS, unless you file for an extension.

Tax extensions extend this deadline to October 16th, giving individuals an extra six months to prepare and submit their paperwork. While this sounds like a dream come true for busy families and procrastinators, it does have its drawbacks.

Let’s take a look at some of the pros and cons of filing for a tax extension:

Advantages of filing for a tax extension:

• It’s easy. Few things are easy when it comes to the IRS, but filing an extension is one of them. Just file before the deadline and fill out the form correctly, and they will be happy to grant you an extension – no questions asked.

• Avoid late fees. Submitting your taxes past the deadline (without filing for an extension) is a fineable offense, and could cost you 5% of your refund check each month you are late, with a cap of 25%. You worked hard for your money, don’t lose it because you didn’t file on time!

• Potentially save yourself an audit. If you rush to submit your taxes before the deadline, chances are greater you will make a mistake, resulting in a dreaded audit. Giving yourself more time to submit your taxes reduces your chances of a critical mistake, and thus reduces your chance of an audit.

• Cheaper preparation. Professional tax preparation services are at their busiest during March and April, and often charge a premium during these months. Not only will appointments be easier to make after the deadline, they might even be cheaper.

Disadvantages of filing for a tax extension:

• You don’t get an extension on taxes owed. Unfortunately, an extension on your paperwork is not an extension on your bill. If you owe money to the government, you must still pay it before the April 18th deadline.

• You delay your refund check. The longer you wait to file your return, the longer you wait for your refund check – it’s as simple as that.

• You are only prolonging the inevitable. Your taxes won’t be any easier six months from now. If you procrastinated this time around, chances are good the same will happen in October, only without the option of an extension to save you.

After weighing out the pros and cons, it makes sense for most people to file their taxes before the deadline, barring any extenuating circumstances. If you are stressing out about getting yours done on time, contact the tax professionals at American Investment Planners, LLC. We will have your return submitted before the deadline, and guarantee to get you the biggest refund possible.

To schedule an appointment with one of our professionals, please call (516) 932-5130 or email info@americaninvestmentplanners.com.