For most U.S. taxpayers, April 15th is known as “tax day,” the deadline for filing income and business taxes. However, many people are eligible for an extension on this date, giving them until October 15th to file (this is for filing the return, not paying taxes, which are still due in July). This year is a unique exception, with all filers automatically being given the extension date, due to the current situation. For those filing their 2019 taxes, you will have until July 15th, 2020, without needing to request a special extension, or worry about fees. It’s important to note that this year is an unusual circumstance, and you should count on normal tax deadlines resuming next year.
Individuals may file for a tax extension using the form IRS 4868, with some special rules applying to those in combat zones or other hazardous duty areas, and U.S. citizens living outside the country. If you are not sure if you qualify for an extension, or you have special circumstances, it’s best to talk with a qualified accountant first. Don’t wait until the last minute, assuming you’ll get an easy extension. Make sure you plan ahead and know your correct filing dates.
Businesses may also file for tax extensions, using either form IRS 7004, or 1138, depending on your business’s financial situation. Many companies, especially those that are high-earning, do international trade, or have otherwise complicated tax filings, choose to extend their filing dates. There may be some advantages to doing this, depending on your industry,
Filing a tax extension can buy you more time to get your paperwork organized. After all, it’s better to extend and file later, than to estimate vital numbers on your tax return and end up having to redo it, or worse, pay a penalty or receive an audit. Asking for an extension may also be useful if you have an unexpected life event or emergency, like a natural disaster, death in the family, or serious illness- these are all reasonable grounds for filing an extension.
Extensions can be great to help you avoid late fees, which are typically 0.5% on any taxes due per month past the deadline. This can add up, especially for higher-earning individuals, as well as businesses. They can also provide additional time for financial planning, particularly for those with IRAs, Roth IRAs, SEP IRAs, or other similar accounts. Tax extensions can give you some breathing room to make the right elections and decisions for your future.
If you need personalized advice on your taxes, or you’re not sure of your tax filing dates this year, reach out to us at S.J.Wick & Associates.