By in Wealth

“A tax extension is an extension of time to file your tax return. However, it is not an extension of time to pay your entire tax bill.”

Why I’m Filing an Extension for Last Year’s Tax Returns

I decided to file extensions for our family’s tax returns as well as my corporate tax return. Here are the reasons:

    1. We moved across the country last August. In tax speak, that means we need to file 2 state tax returns as well as a local return from our old town, on top of the federal return.
    2. In addition to my corporate day job, I’m teaching a university class on Investments, continuing to write for this website, doing some freelance writing (at The Digerati Life, Benzinga, and FindtheBest), and putting the finishing touches on my personal finance book for Gen Yers.
    3. We are refinancing our condo with a 15 year mortgage. (Just finished the refi, still have to or
ganize all the paperwork)
4.  This is an exceptionally busy period and I want to postpone tax activities until a time when there’s less on my plate.

I’ve filed extensions before, but this is the first time I decided in advance (not at the last minute) to postpone completing our returns. The first time we filed an extension was when our moron of a tax accountant didn’t return our phone calls and delayed getting our documents in on time. That was a totally different situation than this one. Needless to say, that accountant is history.

This year, I deliberately decided to space out my personal and professional demands. I’m the opposite of a procrastinator, which means in reality I can be working 24/7. Trust me, working all the time is not a healthy approach to life! This type of excess also cuts back on one’s personal productivity.  To be proactive, I decided in advance that I was not going to approach the tax returns until late Spring. I made certain to pay up by April 15th to avoid any late fees. Although the extension allows an additional six months to file the paperwork, I expect to have it all done by June.

Should You File a Tax Extension?

The time is coming up really soon to get that tax return in. Here are some questions to ponder when deciding whether to file a tax extension.

  • Are you at your wits end right now?
  • Do you have a tax preparer?
  • Do you plan on filing your own taxes but haven’t completed them yet?
  • Have you bought the tax preparation software yet?
  • Are other pressures in your life overwhelming you?
  • Will you have more time in the summer to handle tax related matters?

If you answered “yes” to any of these questions (or “no” to the one about the tax preparer or tax prep software), maybe it is time to file a tax extension.

Remember that a tax extension allows you extra time to file your tax return, not extra time to pay what you owe!

How to File a Tax Extension?

According to the IRS, there are three ways request an automatic extension of time to file a U.S. individual income tax return:

1. You can electronically file Form 4868 (PDF), Application For Automatic Extension of Time To File U.S. Individual Tax Return

2. You can file a paper Form 4868, by mail.

3. You can pay all or part of your estimate of income tax due using a credit or debit card (EFYPS) and obtain an extension during the process. This approach may involve an extra fee.

If now is especially busy and you expect more free time for tax preparation in the upcoming months, consider filing an extension of time. Just remember, those six months can pass by really quickly, so don’t put off your filing until August!

Read What Others are Saying About Tax Extensions

Efile talks about an IRS Tax Extension

KNS Financial instructs How to File for an Extension on Your Tax Return

Saving to Invest asks, Should You File a Tax Return or File a Tax Extension?

 Have you ever filed a tax extension? Did it cause you to procrastinate even more?

image credit; google