So maybe your book-keeping skills aren’t so hot. Receipts can be found anywhere from your car’s glove box, to your wallet, to a stack on your dresser haphazardly mixed-in with some junk mail and bills? Nobody’s perfect. Having the ability to file a tax extension can be awesome. Here are three reasons why it may be a great option for you…
- Filing a tax extension is easy! If you’d like more time to prepare your return, you can simply go to IRS.gov, type “Form 4868” in the search box at the upper right and the “Enter” button. Download the “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return” and follow the instructions on the form. Be sure to file this form by April 17th and include an estimated tax payment with it. The form will help you with this, though, of course you can always obtain assistance from an accountant or other tax professional to help, if you prefer. This lovely form, when filed on-time, can help you avoid penalties and interest charges that you would otherwise be responsible for, if say…you didn’t have your book-keeping in order, and were not ready to file your full return on-time. It grants you an extrasix months (until October 15, 2018), and that is awesome!
- Filing a tax extension will give you invaluable time to get organized. Finding all of those randomly placed receipts is not going to be a quick task, but now that you have more time, you can establish a strategy and break it into small, tolerable sub-tasks. Once you have located your records, you can certainly get everything organized and calculated by yourself manually, or with software such as Quicken QuickBooks. Alternatively, you can hire a professional book-keeper. Going forward, you can look into monthly rates in your area, but if you’re hiring someone for a “one-time,” or on an “as-needed” basis, part-time book-keepers for individuals/couples/families or even small to medium sized businesses often only charge $15-25 per hour, in many areas. Be sure to check rates in your local market to see if it’s something to consider. If book-keeping is not your strong suit, it may be worth the expense just for the peace of mind of getting it done. Perhaps it can save you time for things you actually enjoy, and are good at! Also, the book-keeper may have good tips to help you tame this beast, going forward, and that is awesome!
- Filing a tax extension can you save you money. Well that’s an interesting idea, but how? First and foremost, assuming you file your extension and estimated payment on-time, it can save you from any penalty that would be incurred if you did not file your full return when required, by the April 17th deadline. Otherwise, you could be subject to federal filing penalties and monthly charges resulting from that unpaid tax. That can be a worthwhile level of savings. In addition to that, however, is something that may not be as obvious. If you plan to use an accountant to help you file your tax return, you may find that his or her rates vary by time of year. It’s probable that in the mad rush to complete returns by April 17th, your accountant may have a higher rate than if he or she is able to complete your return at a later date, when the tax season frenzy has passed. It wouldn’t hurt to inquire about this possibility. And yet, there is still another way filing a tax extension can save you money. You may be surprised to see how having extra time to get your book-keeping in order, and to really consider, research and/or discuss possible tax deductions with your accountant/tax professional can result in substantial savings. The cost of rushing through a tax return just to get it turned in on-time can be costly. As businessman and author of “Rich Dad, Poor Dad,” Robert Kiyosaki has said, “Most people fail to realize that in life, it’s not how much money you make, it’s how much money you keep.” Our tax code offers a multitude of ways to keep much of our hard-earned dollars. Filing a tax extension can help you use the tax code to save money, and that is awesome!
Written by Tax Professionals