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Did You Know: Filing for an Extension Can Be a Good Idea?

April 11, 2018 | Mitch Estling

Did you know:

With less than a week to go to meet the April 17 tax deadline, there are some circumstances where you may want to consider hitting pause rather than rushing through your tax return preparation. This is done by filing a Form 4868, Application for Automatic Extension for Time to File U.S. Individual Income Tax Returns. If you don’t file a tax return or at least an extension by the April 17 deadline, then you’ll owe IRS penalties and interest.

Now that you know – here’s what it means!

Filing an extension by April 17 gives you an automatic extension to file your final 2017 tax return by October 15, 2018 for most taxpayers. But, filing an extension does not give you an extension to pay the taxes you owe. You’ll need to make a reasonable estimate of taxes you owe and submit a payment with the Form 4868 or you may face late payment penalties.

And here are the details:

Here are some situations that may warrant filing for an extension:

  • You are waiting for corrected documentation, like a 1099 with revised amounts for qualified dividends and foreign taxes from a financial institution.
  • You waited to get your tax preparer the information he or she needs to file the return. By filing an extension, your preparer will have the needed time to give your return the full attention it deserves.
  • You had income from special situations and you need more time to gather your records and get advice about how to report this income. Examples include the sale of property or exercising stock options.

And, remember, if you file an extension on your federal return, then you’ll also want to file an extension for your state tax return as well.

Need help understanding how to decide if you need to file an extension? Start Here.

The knowledge doesn’t end here. Check back each month for new content that will include industry trends, thoughtful advice, and details about how BerganKDV and our team of experts can be the resource you need. If you’re looking for professional services the Midwest way, start here!

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