Searching for a reason to file a 2015 tax extension?
It’s never a good idea to do anything out of pure laziness. However, if you can justify your logic for filing a 2015 tax extension, then by all means, DO. Here are ten good reasons why you should file a tax extension this year.
1. It does not require IRS approval.
As long as you apply for a tax extension, you’ll get one. It’s not like filing an actual tax return where you need to wait for the IRS to review and approve it. In fact, there is no process at all. Just submit the form to the IRS, and your extension will be on record.
2. You will skip the April 18th deadline rush.
Have you ever tried calling the IRS or your accountant in April? How long were you placed on hold? If you file an extension, you have an extra 6 months to figure out your tax situation.
3. It will NOT trigger an IRS audit.
Some taxpayers shy away from filing a tax extension because they assume it will increase their chance of being audited. The majority of audits happen because of tax returns that are against the typical patterns. When something out of the ordinary is picked up on a tax return by the IRS, they note that something may be wrong and take a further look. Many taxpayers think of an extension to be paired with doing something wrong. In all actuality, tax returns filed in October show a higher rate of being approved since they are filed accurately and completely.
4. You lost your W-2 or 1099.
When you misplace your income statements, it can be a hassle to get another copy. If you can’t get one from your employer, then you’ll need to request a transcript from the IRS. This is an easy process, but it can take up to 10 days to reach your mailbox. And if the transcript is incomplete due to IRS delays, you’ll need to contact your employers directly for a new copy of any W-2s or 1099s you’re missing.
5. You’re better off filing an extension over amending a return.
Filing an extension means you’re allowing yourself extra time to file correctly. Filing your return hastily and amending it later means you made a mistake. Which sounds better to you? Don’t get me wrong – sometimes amending a tax return is absolutely necessary. However, if you have the choice, filing a tax extension is the better option.
6. You’ll avoid late filing penalties.
Failure-to-file penalty fees can add up. And they accumulate quickly if you’re not careful. Each month that you don’t pay the IRS will tack on an extra 5% to your entire bill. You might think that’s not much, considering it’s hardly even the average restaurant tipping rate. However, let’s take a look at an example to put it into perspective.
Let’s say you owe the IRS $1,500. You forgot to file your tax return by the April deadline and suddenly it’s the end of August (oops). That means you’re four months late. So, 5% of $1,500 turns out to be $75. Now multiply that by four months and you’re paying the IRS an additional $300.
Just keep in mind that filing an extension helps you sidestep the failure-to-file penalty but not the failure-to-pay penalty. When you file an extension, you’ll still need to pay the IRS what you owe but you can avoid the late filing penalty fee. Plus, using the same example above, your failure-to-pay penalty would only equal out to an additional $30.
7. You will be converting your IRA account.
Are you planning to convert your traditional IRA into a Roth IRA? You’ll need to pay tax on the entire account balance at the time of conversion. However, the IRS allows you to “recharacterize” your Roth IRA back into a traditional IRA at any time before you file your tax return. This allows you to avoid paying tax on the balance. Since this conversion can be pretty time-consuming, a tax filing extension can eliminate your obligation to pay the tax.
8. You want professional advice.
It’s the first week in April and you realized your tax return is causing you more of a headache than in past years. You decide that calling a tax professional is not a bad idea. You make the call and realize that scheduling an appointment is nearly impossible this time of year. Now is the time to file an extension…and take an aspirin for that headache.
9. Life gets in the way.
Just like everyone’s tax situation is unique, everyone’s life is too. The world keeps spinning and it sure doesn’t stop for taxes! If you’re sick, coping with a death, or are bombarded at work, don’t try to cram in your tax return. File an extension and give yourself the time you need.
10. It’s free and easy to do.
Many don’t realize just how easy it is to file a 2015 tax extension. Do it online with RapidTax after March 17th and I bet you’ll have it done in one commercial break. Then you can continue watching your favorite show with the peace of mind that you have until October 17, 2016 to file your 2015 tax return.