Your Best Bet For Avoiding Tax Extension Complications

By Author: Jeff Parrack
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If you anticipate problems getting your paperwork together or having sufficient time to do your return carefully and accurately, you will show good judgment by filing a request for an income tax filing extension. This gives you up to six full months to get your records straight, find the time to do a proper return preparation (by yourself or with help) and fulfill your legal obligation. Your best bet for avoiding tax extension complications, of course, is getting accurate information in advance and not making any incorrect assumptions about the process.

If you don't think late filing is any big deal, you might feel differently after you have been assessed penalties and interest. A hurried, error-plagued return, on the other hand, has its own dramatic drawbacks, such as triggering an audit. Either of these approaches is dangerous, frankly, and both can get you in trouble, too. It is not only bad information that can harm you, as your intentions, your handling of the extension request and even your tax filing status can combine in unintended ways to result in your request being denied up front or cancelled after initially ...
... being granted. To ensure a smooth process, follow some commonsense procedures and never (never!) proceed if you have any unanswered questions or nagging concerns.

What extensions do not do

It is essential to remember what an extension does not do for you. It is not an exemption, has no provision for refunds and allows little leeway in estimating (and paying) the amount that is due. It is only the return itself, not your tax payment, which is extended from April 15th to October 15th, six months later. Filing an extension does not give you six more months to get your money together to pay your estimated taxes-you still have to pay what you honestly believe you owe, and pay it by April 15th.

You are legally required to supply accurate and honest declarations about your earnings and your estimated tax liability, so when you file for an extension you must make a case that your initial assessment is reasonable and well founded in fact. IRS agents are observant and experienced, and have seen and heard every dodge, excuse, fabrication, story and justification possible. They enter into the consideration of extension requests predisposed to being suspicious of your intentions in asking for one. You will not fool them by trying to "game the system" or manipulate circumstances in your favor. This is a losing proposition from the gate so don't even consider it. Honesty is not the best policy in this case-it is the only policy.

How to do it right

The filing date for federal tax returns is always on April 15th, unless the date falls on a weekend, in which case the following Monday is the deadline. Rather than confuse yourself with any exceptions, just burn "April 15th" into your memory and plan for that date each and every year. You will show some smarts by filing an extension request early-try several months early, in fact-in order to avoid running afoul of technicalities, postal system delays and other unforeseen consequences that can lead to the denial or cancellation of your extension request for the extension.

Always use the correct form, depending on whether you are filing as an individual, partnership, corporation or other entity. IRS Form 4868 is the one most people are familiar with, as it is for individual (and married) filers, while Forms 7004 and 1138 are for various business structures like corporations. There may be other, or additional, forms to file if you are outside the U.S. at the time of making the request or have other special issues with your return. You can certainly investigate and research all of this on your own, assuming you have enough time. You can always consult an attorney, a tax specialist or an "enrolled agent" (certified preparer), too, to make sure that you are doing everything correctly.

The smoother move

Filing early enough for the extension, doing so with the proper IRS Form(s) and fully explaining your situation are key to a smooth extension request and quick approval by the IRS. There are professional firms, both online and off, that have made extension filing simple, low in cost and high in dependability. At the beginning of this article you were advised that, "Your best bet for avoiding tax extension complications, of course, is getting accurate information in advance and not making any incorrect assumptions about the process." When you don't have the time to do it all yourself, however, your best move is to engage the services of a reputable, well-regarded and honest tax extension filing service.

Get all the information together that you possibly can, develop a short and accurate statement about your honest need for the extension, and start early enough (January would be good) so that any issues that could delay your approval can be cleared up in plenty of time. Locate a reputable extension filing service by getting referrals from friends, Internet business listing and review sites, professional acquaintances and others. Check the extension companies' names with the Better Business Bureau and search the Web for complaints (complaints.com is the site with "Consumers In Control"). When you are satisfied you have found a winner, get a move on. If you proceed carefully, honestly and in a well-organized manner, you will get that extension and have the time to prepare your return in the best possible fashion.
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1040-Tax Extension will file your online tax extension with the IRS and guarantee that the IRS will accept your application. Visit online for automatic extension on your individual tax return.