On April 15th every year, every citizen is required to file their tax return but if for some reasons, you are unable to, then filing an extension request is the way to get more time to do so. A tax extension will give you an additional six months until October 15 to file your tax returns. If you, however, miss the extension, you may face some stiff penalties. So, is filing for a tax extension a wise move? Let us check out some pros and cons.
- It gives you enough time to file your tax if your tax documents do not arrive on time or if you have not been able to arrange your deductions.
- It saves you from late penalties. If you file a tax extension and then file your tax returns by October 15, you will not pay the 5 percent monthly penalty for late filing. You will only face the penalty for late filing if you file after October 15.
- It gives you enough time to change the nature of your IRA contribution by October 15 as long as you funded your IRA is funded by April 15.
- It helps you avoid the exorbitant fees that tax accountants charge. Tax accountants raise their tax preparation fees towards April when a lot of people are trying to file their tax returns. If you file a tax extension, the accountants will be less busy, and you can pay a lesser fee that other people paid during the rush period.